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THE  WATER  POWER 


PROBLEM 


OUR  refusal  to  develop  our  wasting  water 
powers  constitutes  the  strangest  feature 
of  our  National  conduct.  For  the  greater  pan\ 
our  water  powers  are  idly  wasting  their  energy. 
The  reason  is  that  we  have  not  yet  been  per- 
suaded to  enact  laws  under  which  money 
may  confidently  be  Invested  in  them.  Until 
we  do  this,  our  water  powers  will  be  as  useless 
to  us  as  though  situated  on  another  planet 


HENRY  J   PltRCr 
SEATTLE.  WASHING  i 


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THE  LIBRARY 

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THE  UNIVERSITY 

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CONTENTS 


PAGE 

Explanation  of  Purpose   7 

How  the  Nation  Is  Concerned 9 

The  Practical  Side  of  the  Question 16 

What  Are  We  Quarreling  About? 24 

Who  Pars  for  Unfair  and  Restrictive  Legislation? 35 

The  Water  Power  Business  and  Its  Risks 41 

Water  Power  Ownership  and  Control 45 

Water  Power  Legislation   48 

( inclusion   62 

Appendix  A — Comparative   Review    of   A  damson    Bill    and 

Adamson-Shields  Bill 67 

Appendix  B — Comparative  Review  of  Public  Lands  Water 

Power  Bills 72 

Appendix  (—The  Adamson-Shields  Bill 83 

Appendix  D— The  Ferris-Myers  Bill 119 

Appendix  E— The  Jones  Bill 137 

Appendix  F— The  Works  Bill 149 

Appendix  G— The  Smoot  Bill 162 


550-286 


LIST  OF  ILLUSTRATIONS 


OPPOSITE 
PAGE 

Plates  la  to  lb— IN  THE  NAME  OF  CONSERVATION. 
Plate  la — Navigation  Dam  and  Power  Plant  at  Look  12, 

Coosa  River,  Alabama 8 

Plate  lb — The  Lock  18  Site,  Coosa  River,  Alabama 8 

Plate  Ic — Power  Plant  of  Ontario  Power  Company,  Niag- 
ara Falls.    ( Exterior) 8 

Plate  Id — Power  Plant  of  Ontario  Power  Company,  Niag- 
ara Falls.     ( Interior) 8 

Plate  Ie — Nitrogen  Plant  of  the  American  Cyanamid  Co., 

Niagara  Falls,  Ontario 8 

Plate     Ha — The  Rjukan  Power  Plant  at  Vemork,  Norway.  .  10 

Plate     lib — The  Nitrogen  Plant  at  Saarheim,  Norway 10 

Plate   Ilia — Denver  &  Rio  Grande  Train  Crossing  Soldiers 

Summit,  Utah 14 

Plate  Illb — Ore  Train  on  Butte,  Anaconda  &  Pacific  Rail- 
way, Montana 14 

Plate  IV — Water  Power  and  Irrigation 18 

Plate    V— A  Glimpse  at  What  Might  Be 22 

Plate  VI — The   Electron   Power   Plant,    Puyallup    River, 

Washington    26 

Plate    VII— Water  Power  and  Live  Stock 34 

Plate  VIII — Hydro-Electric  Power  in  the  Portland  Cement 

Industry 40 

Plate  IX — Hydro-Electric  Power  in  I  rrigatioD 44 

Plate    X— Blewett's    Fall    Dam,    Yadkin    River,    North 

Carolina   48 

Plate  X  I — All  Farmers  Are  Not  Equal  Before  the  Law.  .  .        52 
Plate    XII — Water  Power  and  Highways .">{> 

Plate  XIII — A  Desert   Reclaimed   with   Water   Pumped   by 

I  [ydro-Electric  Power 60 

Plate  XIV-    IIvdro-Eleetrie   Power  in   the  Mining   Industry        (>f> 


"A  t  every  waterfall  two  angels  stay, 

One  clothed  in  rainbows,  the  other  veiled  in  spray. 

The  first  the  beauty  of  the  scene  reveals, 

The  last  revolves  the  mighty  water  wheels, 

And  there  those  ivhite-robed  sisters  ever  stand, 

Beauty  and  Utility,  hand  in  hand.' 


>} 


LOOKING    SQUARELY    AT    THE    WATER 

POWER    PROBLEM 


To  Members  of  Congress  : 

This  is  a  personal  appeal  for  water  power  legislation.  The 
author  confesses  that  he  has  an  old-fashioned  ambition  to  do  a 
constructive  thing — to  assist  in  the  creation  of  an  industrial 
opportunity  in  a  neglected  place  and  to  make  homes  on  land  now 
silent.  He  also  cherishes  a  hope  of  reasonable  and  wholesome 
reward.  These  are  two  honorable  incentives  which  have,  from  the 
beginning  of  things,  animated  individual  effort.  Some  people  re- 
gard such  motives  distrustfully  but  it  cannot  be  believed  that  such 
sentiments  which,  if  manifested  in  an  earlier  day,  would  have 
impeded  or  stifled  our  greatest  commercial  achievements,  will  long 
survive  in  the  present  day.  Therefore,  the  author  will  state  his 
case  in  all  frankness  and  be  confident  that  those  who  cannot  accept 
his  conclusions  will  have  no  reason  to  misconstrue  his  purpose. 

The  author  is  one  who,  seeing  a  development  opportunity, 
thought  it  good  and  praiseworthy  to  invest  therein.  This  oppor- 
tunity comprises  agriculture,  industrial  plants,  transportation, 
*it  ios  and  towns,  homes,  schools  and  churches — in  short  just  that 
sort  of  opportunity  which,  pursued  in  colonial  days,  made  this 
Nation  an  actual  thing.  All  this  forward  movement  is  con- 
tingent on  the  development  of  water  power.  The  wisest  commer- 
cial minds  of  the  country  have  endorsed  this  project,  yet  the 
author  is  unable  to  raise  money  for  its  development.  Those  who 
would,  under  ordinary  conditions,  gladly  lend  their  money,  point 
to  only  one  vital  defect.  The  power  site  is  on  a  navigable  river 
and  the  United  States  controls  the  situation,  because  it  has  the 
sovereign  right  to  withhold  its  approval  to  any  development  on 
navigable  waters.     The  Government  cannot  and   will   not   make 


8  THE    WATER    POWER    PROBLEM 

the  development  itself,  and  the  Federal  laws  under  which  the 
United  States  can  grant  the  privilege  to  private  initiative  are  so 
restrictive  and  unbusinesslike  that  no  one  is  willing  to  risk  his 
money.  This  is  a  strange  situation.  Believing  that  it  could  not 
logically  persist,  the  author  has  spent  the  past  two  years  in  a 
study  of  the  matter,  both  in  Europe  and  in  America.  He  has 
conferred  with  business  men,  bankers,  lawyers,  engineers  and  pub- 
lic officials  of  all  parties  and  prejudices.  The  following  state- 
ment is  a  resume  of  the  results  of  that  experience.  It  is  sent  to 
Members  of  Congress  and  others  in  authority  in  the  hope  that  it 
will  be  of  service. 

It  is  inevitable  that  the  water  power  question  must  soon  be 
dealt  with  by  Congress.  Unless  that  dealing  is  wise  and  business- 
like, the  effort  will  be  useless.  As  will  later  be  shown,  the  water 
power  business  involves  a  multitude  of  investment  risks.  There 
are  nearly  5,000  standard  investment  securities  for  sale  in  the 
open  market.  The  water  power  business  must  compete  for  money 
with  all  of  these  other  standard  investments.  It  ought  to  be  ap- 
parent that  any  water  power  law  under  which  an  invested  dollar 
is  inevitably  doomed  to  depreciation  will  not  encourage  water 
] lower  development.  If,  in  considering  legislation,  our  law-mak- 
ers, while  protecting  fully  the  public  interest,  will  at  the  same 
time  apply  the  homely  and  familiar  rules  of  honest  business  and 
will  searchingly  test  each  section  of  a  legislative  bill  by  deter- 
mining whether,  under  the  terms  proposed,  they  would  be  willing 
to  invest  their  own  money,  or  were  thev  executors  of  an  estate, 
the  money  held  by  them  in  trust,  the  path  to  power  development 
and  all  its  manifold  benefits  will  be  greatly  smoothed. 


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HOW    THE    NATION    IS    CONCERNED 


To  foster  and  encourage  water  power  development  is  a  National 
duty.  This  is  so  for  two  reasons :  First,  every  bit  of  material 
progress  that  the  world  has  made  has  been  the  result  of  man's 
using  some  form  of  energy,  and  the  greater  and  better  and 
cheaper  the  energy,  the  greater  and  better  has  been  the  progress ; 
second,  water  power  is  our  greatest  and  best  and  usually  our 
cheapest  source  of  energy.  In  this  country,  our  water  powers  are 
our  greatest  natural  resource.  Much  of  that  power  now  wasting 
to  the  sea  could  be  developed  for  our  immediate  benefit.  No  man 
can  claim  that  he  is  unconcerned,  for  the  cost  of  his  food  and  his 
clothing,  the  comfort  of  his  shelter  and  the  convenience  and  facil- 
ity of  his  journeyings  are  all  prejudicially  affected  by  the  failure 
to  develop  water  power  to  the  utmost  limit  of  its  usefulness.  The 
fact  that  in  some  regions  there  may  be  no  water  power  opportunity 
does  not  alter  the  foregoing,  because  even  in  such  places  the  price 
of  the  things  that  man  consumes  or  uses  in  his  everyday  life  is 
controlled  by  the  price  at  which  those  things  can  be  produced 
under  the  best  and  cheapest  of  conditions.  The  farmer  on  the 
Kansas  prairie  is  as  much  concerned  with  water  power  develop- 
ment as  is  the  manufacturer  at  the  Falls  of  Niagara. 

Let  us  consider  the  farmer.  His  principal  commercial  interest 
is  in  his  crops.  Be  is  needing  more  and  more  fertilizer.  Try  as  he 
will,  he  does  not  make  his  fields  produce  the  values  that  farms  do 
in  Greal  Britain  or  Prance,  in  Germany,  Belgium,  Holland,  Swe- 
den or  Norway.  Why  is  i!  that  the  fields  of  Great  Britain  produce 
two  and  one-half  times  as  much  wheat  per  acre  as  do  those  in  the 
United  States?  Why  is  it  that  on  an  acre  of  Land,  the  Dutch 
farmer  produces  twice  :is  much  barley,  the  Belgian  farmer  twice 


LO  THE   WATER    POWER   PROBLEM 

as  much  oats  and  the  German  farmer  nearly  twice  as  much  rye  as 
does  the  American  farmer  on  his  fields?  The  answer  is  fertilizer. 
German  experiments  have  shown  that  hy  the  addition  of  2,075,000 
tons  of  nitrogen  to  the  soil  of  the  Empire,  additional  crops  have 
been  obtained  amounting-  to  63,300,000  tons.  Does  this  suggest 
anything  concerning  the  cost  of  living?  Let  us  compare  the  use 
of  fertilizer  in  four  different  countries  in  1911 : 

Lbs.  of  fertilizer  used 
Country  per  acre  of  improved  land 

Belgium  448 

Germany  214 

Great  Britain  152 

United  States  28 

The  foregoing  statement  does  not  show  up  very  well  for  the 
United  States,  yet  that  little  28  pounds  per  acre  meant  the  con- 
sumption of  6,800,970  tons  of  fertilizer  in  1913,  for  which  the 
farmer  paid  $170,000,000.  In  that  year,  our  importation  of  fer- 
tilizer ingredients  amounted  to  $49,622,000.  Where  are  we  going 
to  get  our  fertilizer  when  we  boost  our  crop  yields  up  to  the  level 
of  Great  Britain,  Germany  and  Belgium?  Boost  we  must,  for  our 
population  is  increasing,  and  it  will  easily  mean  an  annual  con- 
sumption of  50,000,000  tons  of  fertilizer.  More  detailed  informa- 
tion concerning  fertilizer  and  its  ingredients  and  manufacture 
will  be  given  in  a  subsequent  chapter.  The  immediate  purpose  is 
to  emphasize  the  fact  that  even  under  the  present  limited  use  of 
fertilizer,  we  are  unable  to  produce  all  that  we  require  and  are 
obliged  to  make  large  importations;  that  there  is  no  need  for  im- 
porting any  nitrogen  because  if  Federal  water  power  laws  could 
be  passed  which  will  suitably  provide  a  safe  financial  basis 
of  investment,  all  the  fertilizer  that  the  country  requires  and  much 
more  for  export  purposes  can  be  cheaply  made  by  utilizing  our 


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HOW  THE  NATION   IS  CONCERNED  11 

water  powers  to  extract  nitrogen  from  the  air.  So  it  is  that  the 
farmer  is  enormously  interested  in  water  power  from  the  fertilizer 
standpoint,  and  because  this  interest  has  to  do  with  food  produc- 
tion, every  citizen  of  the  country  is  likewise  affected. 

But  the  farmer's  interest  does  not  stop  with  fertilizer.  As  will 
subsequently  be  explained,  it  extends  to  irrigation  in  the  arid 
West,  to  the  transportation  of  farm  products  and  farm  supplies, 
including  implements  and  clothing;  and  in  the  water  power  re- 
gions, the  farmer's  interest  extends  to  hydro-electric  energy  in 
farming  operations.  In  like  manner,  we  might  consider  every 
other  vocation  and  show  how  closely  water  power  benefits  in  a 
large  degree  control  them.  Water  power  is  an  individual  matter, 
a  community  matter,  a  national  matter  and,  finally,  the  most  im- 
portant commercial  matter  now  before  the  people.  The  water 
power  is  ours  to  develop  if  we  only  will.  The  farmer  who  indulges 
in  day  dreams  when  he  should  be  harvesting  crops  is  not  highly 
regarded  by  the  community.  What  then  shall  be  said  of  the  Nation 
that  follows  a  similar  practice  with  respect  to  water  power  de- 
velopment? 

Wherever  (he  United  States  has  control,  water  power  develop- 
ment is  stagnant.  This  fact  is  well  known  by  all  who  are  con- 
versant with  the  situation,  and  it  has  been  officially  announced 
by  members  of  the  Cabinet  and  members  of  both  Houses  of  Con- 
gress on  many  occasions.  It  means  that  under  present  laws  it  is 
practically  impossible  to  develop  water  power  sites  that  exist  on 
the  navigable  streams  of  the  country  or  on  the  public  lands  of  the 
West.  Water  power  sites  on  the  navigable  streams  do  not  belong 
to  the  Government  except  in  those  very  pare  rases  where  land  has 
hemi  acquired  by  the  Governmenl  for  purposes  of  navigation.  The 
land  is,  as  a  rule,  in  private  ownership,  and  under  the  "Riparian 
Doctrine,"  which  prevails  in  the  East,  the  ownership  of  land  car- 
ries with   it   the  right    to  use  the  water  in   the  adjacent    navigable 


12  THE   WATER    POWER    PROBLEM 

streams.  Such  use,  however,  is  contingent  upon  the  paramount 
use  of  the  streams  for  navigation,  and  as  the  Federal  Government 
has  supreme  authority  over  navigation  in  our  rivers,  it  follows 
that  no  obstruction  such  as  a  dam  or  any  other  water  power  struc- 
ture can  be  placed  in  such  a  stream  without  the  consent  of  the 
Federal  Government,  Therefore,  the  Government  is  in  supreme 
control,  though  not  necessarily  owning  a  foot  of  land.  The  United 
States  controls  power  sites  of  the  West  in  enormous  aggregate 
capacity  through  ownership  of  land.  The  control  is,  therefore,  not 
begotten  of  sovereign  authority,  as  in  the  case  of  navigable  streams, 
but  is  precisely  the  same  as  that  which  any  individual  would 
possess  who  owned  land  necessary  to  a  water  power  development. 
The  situation  is  further  complicated  by  the  fact  that  these  Western 
lands  of  the  Government  do  not  usually  carry  rights  to  the  use 
of  water  in  adjoining  streams,  as  is  the  case  under  the  Riparian 
Doctrine  of  the  East,  but  such  rights  are  acquired  under 
what  is  known  as  the  Doctrine  of  Prior  Appropriation,  which 
means  essentially  that  he  who  first  appropriates  the  water  and 
applies  it  to  a  beneficial  use  secures  a  vested  right  therein  (so  long 
as,  and  to  the  extent  it  is  actually  used)  which  can  be  exercised  to 
the  detriment,  if  need  be,  of  those  who  made  subsequent  water  ap- 
propriations. The  water  of  the  Western  streams  belongs  to  the 
States  and  not  to  the  Federal  Government,  and  the  fact  that  the 
latter  holds  title  to  the  land  does  not  give  it  sovereign  or  even  pro- 
prietary control  over  the  waters.  In  practically  all  the  arid  States, 
the  holder  of  a  State  water  appropriation  can,  where  physical  con- 
ditions permit,  divert  the  water  from  and  carry  it  around  Govern- 
ment, or  any  other  land,  and  use  it  for  all  public  beneficial  pur- 
poses, but  without  the  State  water  appropriation,  the  mere  owner- 
ship of  land  by  the  Government,  or  anyone  else,  gives  of  itself 
absolutely  no  right  to  appropriate  the  State's  water.  The  water, 
therefore,  is  the  important  thing  and  in  all  developments  involving 


HOW  THE  NATION   IS  CONCERNED  13 

water  appropriations  the  land  is  appurtenant  to  the  water  right, 
which  is  quite  the  reverse  of  the  situation  in  the  East  where, 
under  the  Riparian  Doctrine,  water  is  appurtenant  to  the  land. 

There  is  a  strange  contradiction  in  the  present  Federal  policy 
with  respect  to  Western  development  and  Federal  laws  providing 
for  the  occupation  of  Western  lauds  and  conve3ring  rights  of  way 
over  them,  discriminate  against  water  power  development,  Land 
for  railroad  purposes  can  be  secured  merely  by  constructing  the 
railroad;  land  for  county  roads  and  highways  is  freely  given; 
land  for  irrigation  ditches  can  be  acquired  merely  for  the  asking. 
Under  the  so-called  "Carey  Act,"  millions  of  acres  have  been 
turned  over  to  the  States  and  thence  to  private  citizens  on  the 
sole  condition  that  they  shall  be  reclaimed.  It  is  only  in  case 
land  is  wanted  for  water  power  development  that  the  laws  close 
down  and  say,  "No,  you  cannot  get  titles  to  this  land  at  any  price 
and  you  cannot  use  it  except  on  terms  that  make  financing  of  your 
project  impossible."  It  makes  no  difference  if  the  right-of-way  for 
power  purposes  over  Government  land  is  required  by  the  State,  a 
municipality,  an  irrigation  district  or  an  individual;  it  makes  no 
difference  whether  the  power  is  for  a  public  use  and  is  to  be 
developed  under  complete  sovereign  control  or  is  for  a  private  use; 
it  makes  no  difference  how  vital  the  development  may  be  for  the 
prosperity  and  general  well-being  of  a  struggling  Western  com- 
munity— the  strong  hand  of  might  says,  "No;  nothing  doing." 
There  surely  can  be  nothing  discreditable  in  the  attempt  to  develop 
water  power.  Indeed,  its  benefits  are  in  many  cases  more  widely 
distributed  than  those  of  any  other  line  of  development.  Yet  the 
door  is  closed. 

Some  have  said  that  there  is  no  water  power  stagnation  and  in 
their  attempts  t<»  prove  their  statements,  they  point  to  large  power 
developments  that  have  taken  place  in  this  country  during  the 
past  few  years.     A  little  inquiry  will,  however,  develop  the  fact 


14  THE  WATER  POWER  PROBLEM 

thai  those  recent  developments  have  almost  all  occurred  on  private 
lands  or  in  situations  over  which  the  Federal  Government  has  no 
control.  Is  it  not  a  humiliating  fact  that  if  one  desires  to  develop 
a  modern  industry,  to  increase  and  to  facilitate  public  service  and 
public  convenience,  to  give  employment  to  idle  hands  and  to  ac- 
complish all  of  the  other  beneficial  things  that  are  a  part  of 
national  progress,  he  must,  under  present  laws  and  policies,  care- 
fully avoid  all  of  those  sites  and  locations  which  are,  even  in  the 
smallest  degree,  in  the  ownership  and  control  of  the  Federal 
Government? 

Conservation  has  often  been  defined  as  "wise  use."  The  present 
embargo  on  water  power  development  is  maintained  in  the  name 
of  Conservation.  The  President  must  have  had  this  and  related 
facts  in  mind  when,  in  his  address  to  the  Sixty-third  Congress  at 
the  opening  of  its  Third  Session  in  December,  1914,  he  made  this 
statement : 

"We  have  year  after  year  debated,  without  end  or  conclusion,  the 
best  policy  to  pursue  with  regard  to  the  use  of  the  ores  and  forests 
and  water  powers  of  our  national  domain  in  the  rich  States  of  the 
West,  when  we  should  have  acted;  and  they  are  still  locked  up.  The 
key  is  still  turned  upon  them,  the  door  shut  fast  at  which  thousands 
of  vigorous  men,  full  of  initiative,  knock  clamorously  for  admittance. 
The  water  power  of  our  navigable  streams  outside  the  national  domain 
also,  even  in  the  Eastern  States,  where  we  have  worked  and  planned 
for  generations,  is  still  not  used  as  it  might  be,  because  we  will 
and  we  won't;  because  the  laws  we  have  made  do  not  intelligently 
balance  encouragement  against  restraint.    We  withhold  by  regulation." 

We  may  possess  the  highest  and  most  devoted  faith  in  the  prin- 
ciples of  Conservation  and  at  the  same  time  concur  in  the  state- 
ment made  by  former  President  Taft  to  the  Third  Conservation 
Congress  in  1912,  as  follows: 

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rhapsodies  over  Conservation,  making  the  word  mean  every  known 
good  in  the  world;  for  after  the  public  attention  has  been  roused,  such 
appeals   are  of  doubtful   utility   and   do   not   direct   the   public   to   the 


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HOW  THE  NATION  IS  CONCERNED  15 

specific  course  that  the  people  should  take,  or  have  their  legislators 
take,  in  order  to  promote  the  cause  of  Conservation.  The  arousing 
of  emotions  on  a  suhject  like  this,  which  has  only  dim  outlines  in  the 
minds  of  the  people  affected,  after  a  while  ceases  to  be  useful,  and  the 
whole  movement  will,  if  promoted  on  these  lines,  die  for  want  of 
practical  direction  and  of  demonstration  to  the  people  that  practical 
reforms  are  intended     *     *     *." 


i :;  i 


THE    PRACTICAL   SIDE   OF   THE 

QUESTION 


The  following  estimate  taken  from  the  U.  S.  Geological  Survey 
Report  of  1909  shows  the  available  water  horsepower  in  the  differ- 
ent sections  of  the  United  States,  if  developed  to  the  practicable 
maximum  without  storage: 

North  Atlantic  States 4,910,000 

South  Atlantic  States 5,107,000 

North  Central  States 1,270,000 

South  Central  States 3,312,000 

Western  States 11,019,000 

Total  available  potential  horsepower.  .  .01 ,078,000 

It  is  also  estimated  that  with  practicable  maximum  storage,  the 
total  available  water  horsepower  that  could  be  produced  in  the 
United  States  would  be  200,000,000.  The  present  actual  water 
power  development  in  the  United  States  is  about  0,000,000  horse- 
power, or  l-10th  of  the  amount  available  without  storage  and 
l-30th  of  the  amount  available  with  storage. 

The  Geological  Survey  Report  for  the  year  1913  shows  that 
our  consumption  of  coal  for  all  purposes  was  about  570,018,125 
short  tons,  of  which  the  railroads  alone  used  about  20  per  cent.  In 
addition  to  this,  the  petroleum  used  in  1913  was  equivalent  to 
21,000,000  tons  of  coal.  Every  water  horsepower  now  going  to 
waste  which  could  be  economically  substituted  for  fuel  power 
would  represent  approximately  5*4  tons  of  coal  per  year,  based  on 
an  average  of  12  hours  per  day.  To  indicate  what  are  the  possi- 
bilities of  conservation  along  this  line,  we  need  merely  to  reflect 
upon  the  fact  that  the  ultimate  development  of  01,078,000  horse 


THE    PRACTICAL    SIDE    OF    THE    QUESTION  IT 

power  on  the  foregoing-  coal  consumption  basis,  is  equivalent  to 
the  annual  use  of  nearly  340,000,000  tons  of  coal,  which  at  $2.00 
per  ton,  represents  an  annual  value  of  $680,000,000.  Under 
conditions  of  practicable  maximum  storage,  and  a  development 
of  200,000,000  horse  power,  the  equivalent  would  be  1,200,000,000 
tons  of  coal,  and  $2,400,000,000  annually.  If  all  the  water  at 
these  power  sites  were  used  constantly,  the  foregoing  coal  con- 
sumption figures  would  be  doubled.  Of  course,  this  represents 
the  maximum  attainable  development,  which,  in  all  probability, 
will  not  be  approached  for  a  long  period,  but  it  also  represents 
the  end  which  may  finally  be  achieved.  It  is  certain,  however, 
that  unless  a  start  is  made  by  the  enactment  of  fair  and  practical 
legislation,  efforts  to  accomplish  this  much  to  be  desired  result, 
even  in  small  part,  will  fail.  Does  not  the  possibility  of  so  tre- 
mendous a  saving  of  our  exhaustible  coal  supply  suggest  that  the 
attitude  of  the  Government  should  at  least  be  more  than  sympa- 
thetic toward  the  development  of  our  water  powers?  Every  unde- 
veloped water  power  for  which  a  market  now  exists  represents 
a  will ful  waste  of  an  exhaustible  natural  resource. 

Conservation,  about  which  we  have  heard  so  much,  does  not 
mean  merely  the  wise  and  economical  use  of  a  resource  like  coal. 
It  means  the  saving  of  that  exhaustible  store  in  all  places  where 
au  inexhaustible  resource,  like  water  power,  can  be  substituted  for 
coal.  Every  time  the  United  States  has,  by  the  exercise  of  its 
present  policy  of  stagnation,  prevented  the  development  of  a  water 
power,  it  has  not  alone  prevented  the  growth  of  cities,  or  the  mak- 
ing of  homes  on  the  land;  not  alone  has  it  discouraged  the  expan- 
sion of  industries  or  driven  them  to  other  lands.  These  results,  un- 
fortunate ami  unrighteous  as  they  are,  could  be  compensated  in 
some  degree  by  wholesome  legislative  penitence  in  the  future. 
Bui  all  the  penitence  that  a  great  nation  can  possibly  show  cannot 
replace  one  atom  of  the  thousands  of  millions  of  tons  of  coal  that 


IS  THE    WATER    POWER    PROBLEM 

have  been  ruthlessly  I  mi  rued  while  that  nation,  in  the  name  of  Con- 
servation, li;is  plated  ils  water  powers  beyond  the  reach  of  indi- 
vidual enterprise,  where  the  thoughtful  investor  and  the  prudent 
guardian  of  trust  funds  must  look  upon  them  with  suspicion  or 
scorn. 

The  electrical  energy  produced  through  the  development  of  our 
water  powers  will  find  many  markets,  among  which  are  the  fol- 
lowing : 

The  Electric  Furnace. — Marvelous  new  processes  involving  the 
use  of  the  electric  furnace  have  been  perfected  within  the  past 
few  years.  Over  1,200,000  horsepower  has  been  developed  in  Nor- 
way, Sweden  and  other  European  countries  for  the  fixation  of  at- 
mospheric nitrogen  in  the  form  of  nitrate  of  lime,  nitrate  of  soda 
and  cyanamid,  which  products  are  used  in  the  manufacture  of  fer- 
tilizers, explosives,  cyanides  and  other  needful  products.  There 
lias  been  positively  no  development  of  the  kind  in  this  country 
because  our  great  water  powers  cannot  be  financed  under  present 
laws.  The  United  States  imported  during  1913  nitrogenous  prod- 
ucts to  the  value  of  over  $44,000,000.  These  were  composed  of 
( Chilian  nitrate  of  soda  to  the  value  of  $23,000,000,  the  remainder 
of  manufactured  nitrogenous  products  coming  from  Germany  and 
other  countries.  We  have  long  been  dependent  on  Chili  for  the 
greater  part  of  our  nitrogen,  and  we  have  paid  the  price  fixed  by  an 
absolute  monopoly  known  as  the  "Nitrate  Board."  This  is  a  Euro- 
pean organization.  To  manufacture  nitrogen  from  the  air  in 
amount  equivalent  to  that  imported  from  Chili  in  1913  would 
require  1,100,000  horsepower.  To  this  extent  then  have  we  fostered 
the  equivalent  of  a  water  power  monopoly  over  which  we  can  have 
absolutely  no  control.  It  is  estimated  that  the  richer  deposits  of 
Chilian  nitrate  of  soda  will  be  exhausted  within  twenty  years  and 
then  the  world  will  have  to  depend  upon  the  fixation  of  atmospheric 
nitrogen  for  its  supply.     Thus  there  is  opportunity  to  build  up  a 


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THE    PRACTICAL    SIDE    OF    THE    QUESTION  19 

great  nitrogen  industry  in  the  United  States  which  would  require 
enormous  quantities  of  electrical  energy  and  which  would  free  the 
United  States  from  being  dependent  upon  foreign  countries  for  its 
supply  of  this  tremendously  important  product.  By  failing  To 
develop  this  industry,  we  not  only  inflict  upon  ourselves  a  depen- 
dent condition,  but  we  contribute  largely  to  the  enrichment  of 
foreign  countries,  which,  in  their  wisdom,  have  fostered  and 
encouraged  the  nitrogen  industry. 

Nitrogen  (saltpeter)  is  the  basis  of  explosives  and  from  the 
standpoint  of  National  defense  it  is  imperative  that  the  product 
should  be  made  within  this  country.  The  fact  that  nitrogen  is  not 
manufactured  in  the  United  States  would  prove  of  serious  moment 
in  case  of  war.  In  urging  the  necessity  for  building  plants  for 
the  manufacture  of  nitrogen  through  the  fixation  of  atmospheric 
nitrogen,  military  authorities  have  urged  that  the  plants  be  so 
st  rategically  located  throughout  the  country  as  to  be  well  protected 
against  attack  from  foreign  invasion  from  any  quarter.  Idealizing 
this  precarious  situation,  the  War  Department  has  for  some  years 
been  trying  to  accumulate  a  reserve  store  of  65,000,000  pounds  of 
Chilian  nitrates.  That  is,  the  Department  has  been  forced  to  buy 
from  interests  that  may  be  hostile  the  very  elements  necessary  for 
defense  of  our  Nation.  The  Army  and  Navy  use  annually  over 
6,000,000  pounds  of  this  material  in  times  of  peace.  Our  ideas 
concerning  the  consumption  of  war  munitions  have  been  changed 
during  the  great  crisis  of  the  past  year.  We  know  that  modern 
offense  or  defense  is  largely  a  matter  of  the  efficient  use  of  amounts 
of  explosives  undreamed  of  in  wars  past.  In  a  prolonged  war  our 
Store  of  65,000,000  pounds  of  sodium  nitrate  would  not  go  far.  In 
a  war  such  as  is  now  raging  in  Europe  this  supply  would  probably 
hist  much  less  than  one  week.  With  a  coast  blockaded,  we  would 
find  importations  of  nitrogen  difficult  or  impossible.  Our  crops 
would   have  to  be  appropriated  and   our  fields   would    have   to  be 


20  THE   WATER    POWER    PROBLEM 

devastated  to  secure  that  needful  element  ;  and  all  this  at  enormous 
cost,  and  delay  to  the  Government.  Water  power  development  will 
solve  this  difficulty,  hut  it  should  he  remembered  that  the  construc- 
tion and  equipment  of  water  powers  and  nitrogen  plants  require 
rears.    They  must  he  ready  for  service  at  the  onset  of  war. 

A  quantity  of  phosphoric  acid,  greater  even  than  that  of  nitro- 
gen, is  used  in  the  manufacture  of  fertilizers.  Fortunately  there 
are  enormous  deposits  of  phosphate  rock,  both  in  the  Southern  and 
Northwestern  States.  By  an  electric  furnace  process  recently 
perfected,  phosphoric  acid  may  he  produced  through  the  treatment 
of  phosphate  rock  cheaper  than  by  ordinary  methods.  Here  is  an- 
other great  use  for  hydro-electric  power. 

The  electric  furnace  is  being  more  and  more  used  in  metallurgy. 
We  in  the  United  States  are  far  behind  Europe  in  this  respect,  but 
it  is  apparent  that  with  the  development  of  cheap  hydro-electric 
power,  great  amounts  of  electricity  will  he  used  in  the  treatment  of 
ores  and  in  the  manufacture  of  steel. 

Hydro-electric  energy  will  be  largely  used  for  two  great  agricul- 
tural purposes — in  the  manufacture  of  electro  fertilizers  and  in  the 
operation  of  pumping  plants  to  convey  water  to  the  higher  arid 
lands  of  the  West.  In  many  cases,  large  areas  of  the  richest  lands 
lie  above  the  reach  of  gravity  water.  In  many  other  cases  the 
conditions  are  such  that  irrigation  with  pumped  water  is  cheaper 
and  more  practicable  than  irrigation  by  gravity  water.  Indeed,  the 
cheaper  gravity  irrigation  propositions  of  the  West  have  been 
largely  developed.  The  great  irrigation  development  of  the  future 
will  take  place  in  those  localities  where  the  streams  of  the  West 
not  only  furnish  water  for  agricultural  purposes,  but  also  furnish 
the  power  with  which  to  raise  that  water  to  the  thirsty  lands. 
There  is  also  a  great  field  in  the  use  of  hydro-electric  power  for 
pumping  underground  waters  to  arid  fields,  which  underground 
water  would  otherwise  be  unavailable  for  this  purpose. 


THE    PRACTICAL    SIDE    OF    THE    QUESTION  21 

Transportation. — The  marvelous  financial  and  operating  success 
of  railway  electrification  on  the  Butte,  Anaconda  and  Pacific  Rail- 
way in  Montana  furnishes  a  most  powerful  argument  in  favor 
of  hydro-electric  development  and  it  shows  that  if  by  the  adoption 
of  a  sound  and  sane  water  power  policy,  the  electrification  of  rail- 
roads, especially  in  the  West,  can  be  accomplished,  the  transporta- 
tion benefits  alone  will  be  sufficient  to  warrant  speedy  legislative 
action  to  that  end.  This  railroad,  which  is  largely  devoted  to  the 
transportation  of  copper  ore,  has  about  90  miles  of  electrified  track. 
Electrification  has  brought  about  a  reduction  of  75  per  cent  in  oper- 
ating  delays,  an  increase  of  8.77  per  cent  in  ton-miles  hauled  per 
annum,  and  a  decrease  in  annual  operating  expenses  of  $268,728.12, 
or  36  per  cent.  This  annual  saving  is  equivalent  to  about  20  per 
cent  of  the  total  cost  of  railroad  electrification.  In  the  year  1913 
this  road  was  operated  under  steam  traction  and  the  cost  of  coal 
alone  was  $315,235.74,  while  in  1914,  under  electric  traction,  the 
cost  of  delivered  electric  power  was  only  $164,508.70,  a  decrease 
of  47.81  per  cent. 

The  Chicago,  Milwaukee  &  St.  Paul  Railroad  Company  is  now 
electrifying  a  450-mile  stretch  of  its  transcontinental  road  between 
Barlowton,  Montana,  and  Avery,  Idaho.  It  has  contracted  to  pay 
$550,000  per  annum  for  delivered  electric  motive  power,  as  against 
(he  present  cost  for  coal  over  the  same  line,  approximating  $1,750,- 
000  per  year.  Under  the  new  development,  this  coal  will  be 
saved  and  the  water  power,  a  product  that  has  gone  to 
waste  from  the  beginning  of  time,  will  be  utilized.  It  has  been 
credibly  stated  that  one-third  of  the  freight  equipment  of  this 
and  other  Western  mountain  roads  is  necessarily  employed  in 
hauling  coal  for  the  railway  companies'  use.  Electrification  will 
release  this  costly  equipment  for  more  useful  purposes.  The  suc- 
cessful completion  of  the  electrification  of  this  450  miles  of  line 
is  sure  to  be  followed   !>v  similar  electrification  of  hundreds  of 


THE  WATER  POWER  PROBLEM 

miles  of  the  mountain  divisions  of  other  railroads  of  the  West  if 
suitable  water  power  laws  are  enacted.  It  may  be  remarked  that 
no  pari  of  the  water  power  sites  at  the  Great  Falls  of  the  Missouri 
and  at  Thompson's  Falls  on  Clark's  Fork,  which  will  supply  the 
Chicago,  Milwaukee  &  St.  Paul  Railroad  with  power,  are 
owned  or  in  any  way  controlled  by  the  Federal  Government.  If 
they  had  been  these  great  developments  in  transportation  could 
not  have  been  financed  and  could  not  have  taken  place. 

The  foregoing-  are  merely  a  few  examples  which  show  that  new 
uses  and  new  markets  are  created  for  electrical  energy,  if  only 
the  tenures  are  permanent  and  safe,  and  the  size  and  cheapness 
of  development  are  such  as  to  make  reasonable  profits  possible  at 
unusually  low  selling  costs.  Every  practical  man  of  wide  experi- 
ence in  this  business  knows  that  the  permanency  and  safety  of 
the  investment  mean  more  and  cheaper  development  capital — 
and  perhaps  to  most  of  us  determines  the  ability  to  get  the  capital 
— and  that  in  turn  the  cost  of  capital  is  by  far  the  most  important 
element  in  the  water  power  business. 

Water  power  development  in  different  parts  of  the  country  is 
already  projected  to  the  extent  of  more  than  a  hundred  million 
dollars.  That  development  only  awaits  the  passage  of  water 
power  legislation  by  Congress  under  which  capital  may  be  safely 
provided  for  construction  purposes. 

In  New  England,  a  great  power  on  the  Connecticut  River  would 
be  utilized,  adding  largely  to  the  navigable  reaches  of  that  stream 
and  furnishing  power  for  industrial  purposes.  Great  water  pow- 
ers in  the  Columbia  Basin  would  be  developed,  making  possible  the 
navigation  of  those  streams  far  into  the  interior  and  furnishing 
power  for  the  manufacture  of  fertilizer,  the  operation  of  pumping 
plants  for  the  raising  of  water  to  vast  tracts  of  land,  and  for  trans- 
portation and  municipal  purposes.  Water  powers  now  latent  in 
the  Tennessee,  the  Coosa  and  other  Southern  rivers  and  also  those 


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THE  PRACTICAL  SIDE  OF  THE  QUESTION  23 

in  the  upper  reaches  of  the  Mississippi  River  would  be  developed 
with  similar  beneficial  results.  In  the  mountain  streams  of  the 
West  there  are  enormous  water  power  resources.  Even  in  the 
more  level  States  where  water  powers  have  heretofore  been  given 
little  consideration,  investigations  have  shown  that  good  opportu- 
nities exist.  All  of  this  being  true,  it  is  manifest  that  water  power 
legislation  cannot  be  considered  a  local  or  a  sectional  matter  and 
it  lies  far  above  the  realm  of  politics  and  the  prejudices  of  men. 


WHAT    ARK    WE    OUARRKLING    ABOUT? 


More  than  one  man  who  lias,  with  open  mind,  investigated  this 
national  water  power  controversy,  has  closed  his  review  bv  asking:, 
'•What  are  they  quarreling  about?"  Here  is  a  controversy  of 
about  eight  years'  standing,  which  has  prevented  economic  devel- 
opment in  the  United  States  to  the  extent  of  hundreds  of  millions 
of  dollars.  It  has  caused  and  is  causing  sectional  discontent  and 
suspicion  where  nothing  but  harmony  and  industrial  co-operation 
should  prevail.  Some  entire  States  feel  that  they  are  harshly  aud 
inconsiderately  treated  by  the  Federal  Government — that  they  are 
being  strangled  by  the  hand  of  might.  There  is  a  widespread  con- 
tention that  the  Western  water  power  States  are  being  denied  the 
sovereignty  to  which  they  are  entitled  under  the  Federal  Constitu- 
tion, and  are  having  their  growth  impeded  and  are  being  impover- 
ished because  such  large  proportions  of  the  lands  in  such  States 
are  withdrawn  by  the  Federal  Government  for  water  power  pur- 
poses. Such  lands  are  not  subject  to  local  taxation,  although  the 
communities  and  States  are  burdened  with  the  maintenance  of 
the  law  on  those  withdrawn  lands.  There  is  bitter  complaint  that 
although  those  lands  were  withdrawn  from  sale  or  entry  under  the 
pretext  that  they  would  thereby  be  rendered  readily  available  for 
power  purposes  ami  thus  their  use  for  such  purposes  would  be 
facilitated  and  encouraged,  yet  present  laws  make  it  impossible  to 
use  them — laws  of  fulsome  promise  but  of  deadly  effect. 

Such  are  the  consequences.  Yet  strangely  enough  the  real 
differences  between  the  contending  parties  are  so  small  that  it 
seems  as  if  an  hour's  consideration  by  full-grown  men  ought  to 
remove  all  cause  of  controversy.  Therefore,  is  it  not  time  that  the 
leaders  on  both  sides  pause  for  a  while  and  reason  a  little?     Per- 


WHAT   ARE   WE    QUARRELING   ABOUT?  25 

haps  it  will  be  found  that  some  are  continuing  the  quarrel  merely 
from  force  of  habit.    Well,  then,  what  are  we  quarreling  about? 

Merely  for  convenience,  we  will  call  one  side  ''Theory"  and  the 
other  side  "Practice."  The  conference  would  run  substantially 
as  follows : 

Theory — "You  water  power  people  can't  have  any  more 
perpetual  permits  to  build  and  operate  dams  on  navigable 
streams,  nor  can  you  have  any  more  fee  titles  to  public 
lands  which  involve  water  power  sites." 

Practice — "All  right ;  we  gave  up  expecting  such  things 
long  ago  and  have  planned  accordingly  in  our  calculations 
for  the  future.  We  had  supposed  the  policy  was  all  set- 
tled ;  why  do  you  keep  on  making  speeches  about  it?" 

Theory — "Water  powers  must  be  developed  under  a  per- 
mit or  some  form  of  term  grant  running,  say,  50  years, 
after  w  hit  h  the  people  must  have  the  right  to  take  over  the 
property." 

Practice— u Ave  you  going  to  pay  us  for  the  property 
when  you  take  it  over?" 

Theory — "Certainly,  we  shall  pay  the  fair  value." 

Practice — "Good  scheme — we're  all  agreed." 

Theory — "But  we  are  going  to  pay  you  only  for  the 
fail-  value  of  the  property,  and  for  no  blue-sky  stuff,  like 
capitalized  value  of  the  permit  and  the  Government  lands 
occupied,  goodwill,  profits  that  you  expect  to  get  from 
cout i-acts,  nor  anything  that  is  not  actually  put  into  the 
property  as  a  hard  cash  investment  or  its  equivalent." 

Practice — "All  right  again — don't  want  to  be  paid  for 
any  blue-sky  stuff." 

Theory — "And    we   want   you    to   make   prompt    develop- 


26  THE   WATER    POWER    PROBLEM 

meat  of  the  properties  under  permit  and  not  to  hold  them 
unused  for  speculative  purposes." 

Practice — "Of  course,  we  agree,  and  even  if  we  didn't 
the  fad  would  still  remain  that  money  is  too  scarce  and 
too  valuable  to  throw  around  and  leave  idle  in  such  a  man- 
ner, even  for  speculative  purposes." 

'Hi corn — "There  shall  be  no  artificial  manipulation  of 
things,  nor  any  jockeying  to  the  end  that  the  consumers' 
rates  shall  be  raised  or  that  service  be  deficient  or  dis- 
criminatory." 

Practice — "No;  such  things  should  not  be.  Under  mod- 
ern practice,  the  power  business  must  be  conducted  on 
the  large-volume  and  small-profit  plan,  which  necessitates 
low  rates  and  equal  service.  But  even  if  this  were  not 
so,  public  regulation  through  commissions  now  estab- 
lished in  nearly  every  State  of  the  Union  will  prevent  high 
rates  ami  discriminatory  service." 

Theory — "Your  consumers'  rates  should  be  as  low  as  is 
commensurate  with  a  reasonable  return  to  the  capital 
actually  invested,  irrespective  of  stock  issued." 

Practice — "Certainly — just  a  reasonable  return  on  the 
actual  cash  value  of  the  property.  The  stock  issued  has 
nothing  to  do  with  the  case,  and  is  to  be  disregarded  en- 
tirely, no  matter  whether  it  be  represented  by  actual  face 
value  in  the  plant,  or  be  watered  to  a  million  times  that 
amount.  This  'reasonable  return  on  the  fair  value'  idea, 
regardless  of  stocks  or  bonds,  is  universally  an  established 
principle  in  public  utility  regulation.  A  reasonable  return 
has  been  well  defined  as  the  lowest  return  that  will  induce 
investors  to  purchase  the  securities  of  any  particular  in- 
vestment. A  larger  return  is  unreasonable,  and  a  smaller 
return    will    fail    to    get    the    investment    capital.      The 


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WHAT   ARE    WE    QUARRELING   ABOUT?  2? 

only  complaint  that  we  have  is  that  some  of  you 
people  have  selected  public-land  and  navigable-stream 
power  plants  as  subjects  for  strict  regulation  by  the 
Federal  Government,  but  you  do  not  propose  to  exer- 
cise such  regulation  over  plants  that  happen  to  be  located 
on  private  lands.  Regulation  is  a  great  and  necessary  in- 
stitution ;  it  should  be  exercised  indiscriminately  and  not 
concentrated  on  projects  that  happen  to  be  located  on  sites 
either  owned  or  controlled  by  the  Federal  Government. 
Private  land  plants  and  Government  land  plants  should 
operate  under  exactly  the  same  burdens  and  same  laws." 

Theory — "For  all  Government  property  occupied  or  used 
you  shall  pay  a  fair  rental  or  charge  during  all  the  years 
of  the  permit." 

Practice — UA11  right,  suit  yourself  about  that.  So  long 
as  you  don't  place  your  charges  high  enough  to  make  it 
impossible  to  compete  with  gas  or  steam  power,  or  with 
other  water  powers  over  which  the  Government  has  no 
jurisdiction,  and  so  long  as  we  know  the  amount  of  the 
charge  clear  through  to  the  expiration  of  the  grant, 
we  are  quite  indifferent  in  the  matter.  You  should 
bear  in  mind,  however,  that  in  the  last  analysis  every 
burden  placed  upon  a  water  power  plant  in  public 
service  which  occupies  a  right  of  way  over  Government 
land  is,  and  must  necessarily  be,  passed  on  to  and  paid  for 
by  the  consuming  public.  There  is  no  other  place  for  such 
money  t<»  come  from.  Every  burden  put  upon  such  con- 
suming public,  beyond  the  fair  value  (for  all  purposes) 
of  the  Governmenl  land  so  used  constitutes  merely  an 
unjust  charge  by  the  National  Government  (not  upon  the 
public  service  company  hut  upon  the  consuming  public)  in 
nn  amount  which  would  not  for  a  moment  be  countenanced 


THE  WATER  POWER  PROBLEM 

by  a  jurv  or  a  court  of  equity  if  a  private  citizen  owned  the 
same  land  and  was  in  court  asking  for  adequate  compensa- 
tion for  (lie  use  of  such  land  by  the  public." 

Theory — "You  practical  men  talk  as  though  you  believe 
that  we  conservationists  are  trying  to  lock  up  all  the  water 
power  sites  and  prevent  their  use.  Don't  you  know  that  we 
realize  as  well  as  you  do  that  the  present  enormous  amount 
of  water  power  going  to  waste  is  lost  forever;  that  "the  mill 
will  never  grind  with  the  water  that  is  past?'  " 

Practice — "Well,  it  was  you  conservationists  who  stopped 
the  wheels  of  progress  in  water  power  development.  Why 
don't  you  start  them  again  and  stop  the  great  waste  from 
which  the  country  is  now  suffering?  Let  development  pro- 
ceed and  incidentally  save  our  non-replaceable  fuel." 

Theory — "That  is  exactly  what  we  have  been  trying  to 
do,  but  you  practical  fellows  are  too  fussy  and  critical  con- 
cerning our  Department  rules  and  of  the  bills  that  we  have 
had  introduced  into  Congress." 

Practice — "Why  should  the  investor  not  be  afraid  of 
placing  his  money  under  the  absolute  control  of  a  Federal 
department  when  the  laws  now  in  effect  do  not  allow  the 
department  heads  to  make  water  power  agreements  which 
will  bind  the  Government  or  create  property  rights  even 
though  11,000,000,000  may  be  invested  in  a  plant,  Have 
you  forgotten  the  large  number  of  permits  that  were  arbi- 
trarily revoked  notwithstanding  the  fact  that  the  permit- 
tees had  not  violated  law  or  regulation?  Have  you  over- 
looked the  fact  that  a  large  number  of  consequent  ejectment 
suits  are  now  pending  in  the  United  States  courts  which,  if 
successful,  will,  in  effect,  confiscate  about  $100,000,000 
worth  of  property,  some  of  which  was  built  many  years 


WHAT  ARE  WE  QUARRELING  ABOUT?  29 

ago  on  the  faith  that  Government  permits  were  unques- 
tionably secure?" 

Theory — "Those  revocations  were  and  are  great  mistakes. 
We  believe  in  government  by  law  and  not  by  individual  dis- 
cretion. We  believe  that  every  dollar  devoted  to  a  public 
use,  to  serve  the  people  with  water  power  or  anything  else, 
should  be  protected  by  the  strong  arm  of  the  Government — - 
that  the  good  faith  of  the  Government  should  be  pledged  in 
the  strongest  language  possible  to  protect  all  servants  of 
the  people  who  do  their  duty  honestly  and  efficiently." 

Practice — "That  is  right,  but  your  suggested  laws  do  not 
accomplish  this  purpose;  they  are  not  practical;  they 
shackle  and  impede  your  public  servants  so  that  it  is  im- 
possible to  serve  the  people  well,  efficiently,  or,  perhaps,  at 
all.  Why  do  you  continue  to  pile  on  harsh  and  burdensome 
requirements  and  uncertainties  which  do  not  apply  in  any 
respect  to  public  servants  on  privately  owned  lands;  which 
add  to  the  cosl  of  money,  which  increase  operating  expenses 
and  which  prevent  lower  rates  to  the  people?  Don't  you 
know  that  all  this  prevents  development,  injures  the  whole 
country  and  benefits  no  one?" 

Theory — "No;  such  results  are  not  desired  nor  intended. 
We  are  not  advocating  these  things  as  a  means  of  securing 
revenue  for  the  Federal  Government  beyond  a  fair  return 
on  tin-  reasonable  value  of  its  lands  for  all  purposes.  We 
want,  however,  to  he  sure  that  you  water  power  men  do  not 
abuse  the  public  nor  extort  unreasonable  profits  from  the 
people." 

Practice — "That  is  entirely  proper;  but  the  things  of 
which  we  complain  have  nothing  whatever  to  <h>  with  deter- 
mining the  reasonableness  or  unreasonableness  of  rates  or 
the  quality  or  conditions  of  the  service.     We  are  objecting 


30  THE  WATER   POWER   PROBLEM 

to  special  burdens  applying  to  power  sites  under  Govern- 
ment control  and  not  to  all  power  sites  alike;  to  the  things 
that  benefit  no  one  and  yet  either  prevent  development  or 
increase  the  cost  of  service  to  the  people.  Why  is  not  regu- 
lation and  protection  the  only  practical  way  to  get  the  best 
service,  to  secure  investment  capital  and  to  confine  profits 
to  a  reasonable  return  on  that  capital?" 

Theory — "That  is  all  right,  but  how  do  we  know  that  reg- 
ulation will  always  be  effective  unless  the  departments  in 
Washington  can  at  all  times  keep  a  strangle  hold  on  the 
public  service  corporations  in  the  States  and  make  them  be 
good." 

Practice — "There  you  go  again,  back  to  government  by 
the  individual  and  at  the  discretion  of  an  appointive  Fed- 
eral officer — subjecting  millions  of  the  people's  savings  to 
the  ever-changing  personnel  of  a  Federal  office  and  to  the 
individual  preferences  and  whims  of  the  Federal  officer  for 
the  time  being.  That  is  exactly  the  present  state  of  affairs ; 
that  was  exactly  what  resulted  in  the  large  number  of  per- 
mit revocations  in  the  past  and  the  subsequent  ejectment 
suits.  You  know  that  capital  is  now  shunning  power 
developments  where  Federal  authority  is  involved.  A 
burned  child  dreads  the  fire." 

77teor<y_"YYe  agree  that  regulation,  if  effective,  will 
remedy  all  these  things  and  will  make  it  safe  to  enact  a 
short  law  putting  the  power  sites  now  under  Government 
authority  upon  just  as  favorable  a  basis  as  those  on  private 
lands.  We  want  the  largest  and  best  power  development 
and  we  want  it  now.  We  are  willing  to  put  the  public  land 
developments  on  even  a  more  favorable  status  than  those 
on  private  land  if  this  is  necessary  to  accomplish  the  de- 


WHAT  ARE  WE  QUARRELING  ABOUT?  31 

velopment.     But  how  can  we  be  sure  that  regulation  will 
be  honest  and  effective?" 

Practice — "Practically  every  State  now  regulates  its 
public  servants  and  this  will  soon  be  universal.  The  people 
have  the  power  to  regulate  and  cannot  divest  themselves  of 
that  power.  Who  are  most  interested  in  the  development 
of  power  and  in  the  quality  and  conditions  of  the  service 
and  in  the  rates  charged?'1 

Theory — "The  people  who  use  the  service  and  pay  the 
bills,  of  course." 

Practice — "Certainly,  it  is  the  consuming  public  that  has 
a  direct  personal  interest  at  stake.  If  their  public  service 
commissioners  do  not  do  their  duty,  it  is  in  the  people's 
power  to  get  new  commissioners.  If  the  local  law  regard- 
ing such  matters  is  defective,  the  public  can  change  it. 
Some  of  the  proposed  Federal  laws  on  this  subject  have  ap- 
parently been  framed  with  the  idea  that  it  is  wrong  to 
secure  the  greatest  possible  development  and  the  least  pos- 
sible rates  to  the  public.  They  have  been  framed  with  the 
idea  of  maintaining  rates  that  will  produce  fancy  profits 
and  to  divide  those  profits  with  the  Federal  Government. 
If  this  is  not  done,  but,  on  the  contrary,  the  consuming 
public  is  allowed  to  regulate  the  rates  that  they  pay,  and  if 
they  arc  allowed  to  take  all  the  benefits  that  arise  from  the 
securing  of  cheap  money,  large  volume  of  business,  inter- 
connection of  power  systems,  etc.,  don't  you  think  that 
human  nature  is  such  that  the  consuming  public  can  be 
trusted  to  get  for  themselves  every  such  benefit  over  and 
above  sneh  reasonable  return  as  is  necessary  to  get  the  in- 
vestment capital  in  any  particular  case?" 

Theory — "Von  are  right.    Besides,  if  any  particular  com- 
munity  or   State   has    large  and    cheap    water   power    re- 


32  THE  WATER  POWER   PROBLEM 

sources,  it  would  not  be  fair  to  take  away  from  that  com- 
munity or  State  the  inherent  advantage  given  it  as  a  birth- 
right by  denying  the  fullest  right  to  the  lowest  possible 
rates  to  its  industries  and  people  so  as  to  secure  for  them 
all  the  benefits  over  and  above  a  fair  return  on  the  invested 
capital." 

Practice — "It  has  been  proved  over  and  over  again  that 
the  lower  and  more  stable  the  rates,  the  greater  the  indus- 
trial development  in  any  particular  community  and  the 
safer  the  capital — one  thing  helps  another.  This  plan 
means  more  volume  of  business  and  more  and  cheaper 
money  and  more  development.  The  Federal  tax  or  the 
scheme  whereby  fancy  profits  are  divided  with  the  Federal 
Treasury  means  the  reverse,  and  besides,  it  stunts  the 
growth  of  those  communities  by  robbing  them  of  their  nat- 
ural advantages." 

Theory — "But  all  the  while  your  books  and  records 
must  be  open  to  inspection  of  the  proper  authorities,  and 
there  must  be  full  publicity." 

Practice — "Yes,  that  is  all  a  part  of  modern  public 
utility  regulation." 

It  will  be  noted  that  "Practice"  conceded,  as  it  has  done  repeat- 
edly in  the  past  few  years,  every  correct  principle  put  forth  by 
"Theory."     "Practice"  has  some  points  of  its  own  to  bring  up, 


viz. 


Practice — "You  theorists  seem  to  think  that  we  want 
something  for  nothing;  that  we  want  lands  and  rights 
without  charge,  and,  when  they  are  taken  over  by  the 
Government,  that  we  want  to  be  paid  millions  of  dollars 
for  them.    Do  you  think  that,  in  view  of  our  previous  an- 


WHAT  ARE  WE  QUARRELING  ABOUT?  33 

swers  to  your  questions,  you  are  justified  in  your  public 
charges  that  we  are  robbers  and  oppressors  of  the  public?" 

Theory — "It  is  quite  apparent  that  if  you  will  make 
good  on  all  you  have  said,  the  charges  made  against  you 
are  undeserved." 

Practice — "You  folks  think  we  ought  to  make  a  little 
money  on  our  investments?" 

Theory — "Oh,  yes;  liberal  earnings — as  much  as  12  per 
cent  in  some  cases  to  compensate  for  your  great  risks." 

Practice — "You  think  that  legislation  should  be  so 
framed  that  we  can  safely  provide  money  at  low  rates  of 
interest;  that  we  should  have  an  assured  title  in  the  prop- 
erty, irrevocable  except  for  breach  of  contract;  that  we 
should,  so  long  as  we  serve  the  public  faithfully  and  well, 
be  free  from  harassment  and  needless  abuse,  and  all 
attendant  dangers  and  menaces  to  our  securities — 
in  short,  that  we  should  be  able  to  live  normally  on  a 
stable  basis,  and  have  our  securities  accepted  as  standard 
investments?" 

Theory — "Yes,  yon  should  have  the  benefit  of  all  of  those 
things." 

Practice — "Now,  do  you  think  we  can  have  and  hold  all 
those  comforting  assurances  if  you  pass  a  law  under  which 
the  rules  of  the  game  may  be  changed  after  we  have  put 
our  money  on  the  table?  Do  you  think  we  can  secure 
money  cheaply  or  sustain  the  value  of  our  securities  if  the 
law  that  you  pass  leaves  the  safety  of  our  property  without 
even  the  right  of  appeal,  subject  to  the  varying  views  of 
successive  Federal  officers,  or  hides  the  future  from  us,  or 
makes  us  guess  as  to  what  will  be  the  order  of  the  day  or 
the  rules  of  the  game  20,  30,  or  40  years  hence?     Do  you 


34  THE    WATER    POWER    PROBLEM 

think  that  uncertainty  and  financial  stability  can  dwell  in 
accord?" 

Theory — "No;  judging  from  the  principles  of  old-fash- 
ioned business  under  which  one  honest  man  always  has 
and  always  must  deal  with  another  man,  it  appears  only 
logical  and  reasonable  that  your  water  power  law  must  be 
uniform  in  its  application,  definite  and  sure  in  its  terms 
and  give  you  a  clear  look  through  to  the  end." 

Thus,  theory  and  practice  are  entirely  in  accord,  as  is  always 
the  case  when  practice  is  honest  and  theory  is  correct. 


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WHO    PAYS    FOR    UNFAIR    AND 
RESTRICTIVE    LEGISLATION? 


The  foregoing  imaginary  conference  covers  all  of  the  fundamen- 
tal things  involved  in  the  legislative  features  of  this  water  power 
question,  and  concerning  them  there  is,  and  there  can  be,  no  dis- 
pute among  considerate  persons.  When,  however,  we  come  to  the 
drawing  of  a  legislative  measure,  it  seems  that  we  are  almost  cer- 
tain to  break  away  from  this  understanding.  Small  details  and 
uncertain  or  indefinite  expressions  creep  in  or  are,  in  ignorance 
and  without  malicious  intent,  placed  in  to  defeat  the  very  real  ob- 
jects that  all  parties  seek  to  attain.  Who  pays?  No  one  but  the 
con  sinning  public.  Well-meaning  speakers  and  writers  blessed 
with  patriotic  regard  for  the  public  welfare  have  thoughtlessly 
advocated  many  things  the  effect  of  which  would  be  to  impede  the 
progress  of  the  water  power  developer,  restrict  his  operations  or 
prevent  his  exercising  skill,  enterprise  or  other  goodly  quality  in 
the  interest  of  his  business.  It  will  not  be  practicable  to  enumer- 
ate and  discuss  all  such  instances  here  but  every  one  familiar  with 
this  subject  will  recall  one  or  more.  Those  who  propose  such 
things  do  not  need  to  take  the  word  of  anyone;  let  them  get  right 
down  to  fundamentals,  use  some  good  old-fashioned  arithmetic, 
and  they  may  prove  to  their  own  satisfaction  that  the  consuming 
public  pays  and  pays  right  well.  To  illustrate  this  point,  we  may 
select  one  of  several  unwise  provisions  of  the  so-called  "Ferris 
Water  Power  Bill"  as  passed  by  the  House  of  Representatives  in 
the  Sixty-third  Congress. 

The  provision  here  selected,  which  was  subsequently  changed  in 
Senate  Committee,  occurs  in  Section  5  of  the  House  bill  and  pro- 
vides that  the  Government,  upon  taking  over  the  property  at  the 


;;<;  THE   WATER    POWER    PROBLEM 

expiration  of  any  lease  period,  shall  pay,  "first,  the  actual  costs  of 
rights  of  way,  water  rights,  lands  and  interests  therein  purchased 
by  the  lessee  *  *  *  and,  second,  the  reasonable  value  of  all 
other  property  taken  over,  including  structures  and  fixtures  ac- 
quired, erected  or  placed  on  the  lands  *  *  *."  Reduced  to 
simplest  terms,  these  expressions  mean  that  no  lessee  would  be 
allowed  to  benefit  from  any  increase  in  land  values  that  might 
take  place,  or,  in  other  words,  the  owners  of  the  power  plant  could 
not  partake  of  any  of  the  prosperity  which  they,  by  their  invest- 
ment, had  created  or  initiated.  On  the  other  hand,  the  power 
plant  will  be  penalized  under  the  term  "reasonable  value"  for 
all  obsolescence  and  depreciation  on  structures  and  equipment, 
i.  e.,  the  owners  would  receive,  on  taking  over  of  the  plant,  a  price 
considerably  less  than  the  cost  of  the  structures  and  equipment. 
Thus,  the  Government  says,  "Eleads,  I  win  ;  tails,  you  lose."  It  was 
argued  by  the  well-meaning  gentlemen  who  were  responsible  for 
this  clause,  that  the  people  would  thereby  be  saved  large  sums  of 
money.  A  little  arithmetic  will  demonstrate  that  it  would  have 
quite  the  opposite  effect. 

Assume  a  water  power  site  of  10,000  horsepower  capacity,  which 
occupies  land  valued,  for  power  purposes,  at  f  100,000.  One-half 
of  this  land,  owned  by  the  United  States,  is  acquired  under  lease, 
as  proposed  by  the  "Ferris  Bill;"  the  other  half  is  owned  in  fee 
by  private  parties  and  is  purchased  by  the  lessee  for  the  sum  of 
$50,000.  Under  the  above  plan,  the  land,  when  taken  over, 
would  cost  the  public  only  $50,000.  Let  us  go  beyond  the  point  at 
which  the  advocates  of  this  measure  stopped.  The  power  plant, 
with  all  its  appurtenances,  including  transmission  and  distribu- 
tion systems,  would  normally  be  worth,  say  $3,000,000.  How  much 
is  it  actually  worth  as  an  investment  risk  under  the  abnormal 
condition  created  by  the  proposed  law,  in  which  it  cannot  partake 
of  the  normal  prosperity  of  the  region  as  reflected  by  land  values? 


WHO  PAYS  FOR  UNFAIR  LEGISLATION?  37 

Obviously,  the  plant  starts  out  with  a  handicap.  It  cannot  stand 
in  competition  with  other  investment  risks  in  the  region.  Lands 
in  the  vicinity,  occupied  by  dwellings,  stores,  industrial  plants, 
railroads,  etc.,  can  all  appreciate  in  value  along  with  the  country's 
prosperity.  Not  so  with  the  power  plant.  It  is  doomed  at  the 
outset  to  curtailment.  The  penalties  of  depreciation  are  certain 
while  the  usual  rewards  of  appreciation  are  denied.  Of  course, 
the  plant  can  never  be  worth  all  it  costs  to  build  and  maintain 
it.    What  is  the  result? 

No  one  is  going  to  be  foolish  enough  to  buy  the  bonds  of  that 
power  plant  at  as  large  a  price  as  could  be  demanded  if  the  plant 
were  not  tied  up  with  an  anti-appreciation  stipulation.  Moreover, 
more  interest  will  surely  be  demanded  on  a  bond  covering  a  plant 
of  this  kind  than  in  the  case  of  a  security  underlying  any  other 
proposition  that  could  hold  up  its  head  in  a  competitive  bond 
market.  Remember  that  all  of  these  industries  compete  with  one 
another  for  money,  and  the  one  that  shows  the  weakest  case  is  the 
one  which  pays  most  for  its  money,  unless,  indeed,  it  is  so  weak 
that  it  can't  get  money  at  any  price.  The  bonds  of  a  non-appre- 
ciating  and  surely  depreciating  plant  on  Government  land 
would  be  discounted  in  excess  of  5  per  cent  more  than 
they  would  if  on  private  land,  and  pay  at  least  1  per 
(cut  additional  interest  during  their  life.  A  $3,000,000  plant 
bonded  to  SO  per  cent  of  its  value  would  issue  securities  aggregat- 
ing 12,400,000.  Five  per  cent  discount  on  that  sum  would  amount 
to  |120,000.  One  per  cent  interest  would  be  $24,000  annually. 
Throughout  the  period  of  bonded  indebtedness,  this  extra  interest 
would  be  paid  and  the  land  in  question,  originally  valued  at 
$50,000,  would  eventually  cost  al  least  $1,000,000.  Who  would 
pay  for  this?  No  one  but  the  consuming  public.  All  of  these 
extra  costs  are  the  just  and  legal  obligations  forced  upon  the 
power  plant.     The  power  plant,  on  the  other  hand,  derives  its  en- 


38  THE   WATER    POWER   PROBLEM 

tire  income  from  the  public  and  in  fixing  a  just  consumers'  rate,  a 
public-  service  commission  would  have  to  allow  for  all  of  these 
extra  costs  due  to  increased  risks.  The  public  would  find  it  all  in 
their  monthly  bills.  So  it  is  that  the  great  and  beneficent  purpose 
of  saving  the  public  the  cost  of  appreciation  on  land  worth  $50,000 
fails  when  tested  by  the  ordinary  rules  and  laws  of  credit,  of  in- 
vestment  and  of  common  sense. 

The  procedure  and  the  equities  in  a  real  estate  transaction 
are  familiar.  Suppose,  for  example,  that  a  man  buys  a  lot  of 
land  in  a  new  and  rapidly  growing  town  that  has  been  located 
around  a  water  power  development  or  is  created  by  industries 
that  spring  up  within  the  area  of  power  transmission  as  the  result 
of  a  hydro-electric  development.  It  is  known  that  the  usual  and 
proper  course  of  procedure  is  for  the  purchaser  of  that  lot  of  land 
to  erect  a  building  thereon,  say  for  mercantile  purposes.  He  does 
not  anticipate  appreciation  in  value  of  the  structure.  On  the 
contrary,  he  knows  that  the  structure  will  depreciate  and  its  value 
will  become  constantly  less.  His  productive  investment  is  in  the 
land  and  there  comes  a  time  in  the  growth  of  the  municipality 
when  he  can  afford  to  disregard  any  value  in  the  building  because 
he  secures  a  reasonable  profit  in  the  increased  value  of  the  land. 
Suppose,  further,  that  with  the  growth  of  tin1  municipality,  Con- 
gress decides  that  it  has  become  advisable  to  erect  a  Postoflfice 
building  and  selects  this  property  as  the  best  and  most  advantage- 
ous. No  question  would  ever  arise  concerning  the  propriety  of 
paying  to  the  owner  of  the  property  a  price  that  would  represent 
the  original  cash  price  he  paid  for  the  land,  plus  the 
appreciated  value.  Such  a  proceeding  would  be  equitable 
and  the  owner  would  be  awarded  that  reasonable  appreciation 
under  condemnation  proceedings.  Now,  during  all  the  time 
in  which  that  property  was  in  private  ownership,  tin1  owner 
thereof   would   be   serving   his   own    interest    exclusively.      There 


WHO  PAYS  FOR  UNFAIR  LEGISLATION?  39 

would  be  no  regulation  of  the  amount  of  rental  that  he 
could  charge  tenants  for  the  use  of  that  property  and  he 
could  discriminate  and  extort  to  his  heart's  content  so  long 
as  he  found  a  willing  subject.  The  water  power  developer,  on  the 
other  hand,  whose  hydro-electric  property  might  perhaps  be 
located  on  the  next  block,  would  be  always  subject  to  sovereign 
control;  his  profits  would  be  regulated,  his  accounts  made  public 
and  those  with  whom  he  conducted  his  business  would  be  pro- 
tected from  discrimination  and  extortion.  Purely  real  estate 
transactions  of  the  kind  above  described  are  considered  thor- 
oughly honorable  and  legitimate.  Are  honorable  water  power 
transactions  less  honorable  than  real  estate  transactions?  The 
fact  that  the  water  power  operator  is  in  public  service  is  admit- 
tedly a  justification  for  the  sovereign  control  of  his  business  in  the 
public  interest,  while  the  nature  of  the  real  estate  operator's  busi- 
ness clearly  exempts  that  business  from  such  regulation.  Never- 
theless, this  difference  in  public  relation  does  not  justify  the  as- 
sumption that  the  fundamental  laws  governing  property  values 
are  changed  in  any  way  or  that  justice  and  equity  should  not  be 
applied  uniformly.  That  which  the  real  estate  operator  would 
lose  on  his  building  would  be  compensated  by  the  appreciation  on 
his  land,  and  unless  this  principle  be  applied  to  all  real  estate 
transactions,  there  can  be  no  stability  of  investment  in  real  estate. 
If  the  Government  must,  in  equity  and  justice,  pay  the  appreciated 
value  for  the  Postoffice  site,  it  follows  that  that  same  equity  and 
justice  would  demand  that  the  Government  pay  for  appreciated 
value  in  the  lands  acquired  by  purchase  for  a  water  power  site. 
This  does  not  refer  in  any  way  to  the  recaptured  Government 
land  for  which  nothing  was  paid,  and  for  which  nothing  is  asked, 
but  it  refers  only  to  private  land  purchased  for  cash.  How  much 
pioneering  would  there  have  been  in  building  our  Western  cities 
if  it  had  been  provided  by  law  that  someone  could  come  in  and 

(5) 


40  THE  WATER   POWER    PROBLEM 

lake  over  our  homes,  stores,  or  office  buildings,  at  their  depre- 
ciated values,  and  yet  allow  nothing  to  the  pioneer  for  apprecia- 
tion of  the  land  on  which  the  structures  are  built?  Again,  let  us 
consider  the  property  as  a  whole.  There  can  be  no  possible 
enhancement  in  the  elements  of  value  common  to  a  private  enter- 
prise because  every  possibility  of  obtaining  more  than  a  reason- 
able return  upon  the  actual  investment  devoted  to  a  public  use  is 
barred  through  regulation.  The  water  power  owner  can  claim 
nothing  for  the  loss  of  anticipated  profits  from  pending  contracts, 
good  will  and  many  other  items  of  speculative  value  which  are 
and  must  be  considered  when  the  Government  is  taking  over  the 
business  and  property  of  a  private  owner. 

The  case  above  discussed  is  similar  to  many  others  which  could 
be  picked  out  of  the  original  Ferris  Water  Power  Bill.  We  may 
be  certain  that  whenever  a  patriotic  gentleman  arises,  in  the  pub- 
lic interest,  to  place  burdens  on  a  water  power  development,  he  is 
actually  not  placing  the  burden  on  the  development  company  but 
upon  the  people  in  whose  interest  he  is  supposed  to  act. 

In  private  homes,  the  master  furnishes  the  money  to  maintain 
the  household,  and  anything  that  makes  it  more  expensive  or  more 
dangerous  for  a  servant  to  perform  his  duties  is  first  of  all  a  tax 
on  the  master.  In  the  public  service  power  business,  the  people 
are  the  sovereign  and  master,  and  the  public  service  company  is  the 
servant.  The  capital  of  investors  is  here  being  hired  to  serve  the 
sovereign  people.  The  people  must  pay  the  bill  and  be  fair,  else 
the  servant  will  be  unable  to  obtain  the  money  upon  reasonable 
terms,  necessary  for  the  service  of  the  master.  What  master  of 
the  house  can  expect  efficient  and  faithful  service,  or  any  service 
at  all,  if  he  starves  or  maltreats  his  servants?  Does  not  the  same 
rule  apply  to  the  hiring  of  money  and  practical  men  of  experience 
in  the  public  service  power  business? 


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THE   WATER    POWER    BUSINESS  AND 

ITS    RISKS 


One  should  remember  the  peculiarities  and  risks  of  the  water 
power  business  in  this  country,  in  the  making  of  laws  relating 
thereto.  A  law  that  might  well  serve  the  needs  of  mercantile  or 
manufacturing  business  would  utterly  fail  if  applied  to  the  water 
power  business.    Why? 

No  business  requires  so  much  capital  investment  per  dollar  of 
gross  annual  receipts  as  the  water  power  business.  The  pros- 
perous merchant  will,  in  a  year's  operations,  take  in  four,  five  and 
sometimes  six  times  as  much  money  as  is  represented  by  his 
capital  investment,  or,  in  other  words,  the  merchant's  capital  in- 
vestment is  only  25  per  cent,  20  per  cent  or  16  per  cent  of  his  an- 
nual gross  receipts.  In  the  case  of  manufactures,  the  Thirteenth 
Census  Report  shows  that  on  a  total  investment  in  the  United 
Slates  of  $18,490,749,000,  the  value  of  manufactured  products  in 
1909  was  $20,7<;7,546,000.  Therefore,  the  manufacturers  of  the 
country  "turned  their  capital  over''  a  little  more  than  once  during 
that  year.  In  the  hydro-electric  business,  however,  it  requires  on 
;m  average  of  from  six  to  seven  years'  gross  earnings  to  equal  capi- 
tal investment.  All  of  this  means  that  in  order  to  earn  a  dollar 
gross,  the  water  power  investor  must  tie  up  from  24  to  36  times 
as  much  capital  as  the  merchant,  and  six  times  as  much  as  the 
manufacturer.  Therefore,  the  greatest  items  to  he  considered  are 
i  1  i  the  rust  of  the  large  amount  of  money  required  and  (2)  the 
fact  that  under  the  besl  and  most  liberal  of  conditions,  the  water 
power  Investment  risk  must  he  large.  A  had  title  or  a  burdensome 
(lovernmental  restriction  might  he  a  fairly  safe  financial  risk  in  a 


42  THE  WATER  POWER  PROBLEM 

mercantile  business  and  at  the  same  time  be  quite  fatal  in  the 
water  power  business. 

We  always  seek  to  place  an  office  building,  mill  or  factory  in 
a  safe  locality.  A  water  power  plant  must,  on  the  contrary,  always 
be  located  in  a  hazardous  place.  If  it  were  not  so  put,  it  could  not 
be  a  water  power  plant.  One  of  the  first  requisites  of  a  high-power 
transmission  line  is  that  it  shall  stand  out  free  and  aloof  from 
every  other  thing — in  other  words,  that  it  shall  be  exposed  to  all 
severe  storm  conditions.  When  the  war  broke  out  in  Europe,  Con- 
gress very  properly  hastened  to  provide  for  "War  Risk  Insurance." 
A  power  plant  and  its  transmission  lines  are  perpetually  at  war, 
with  persistent  and  relentless  forces  of  nature.  Shall  the  water 
power  investor  be  denied  war  risk  insurance?  Let  him  have  it  in 
the  shape  of  reasonable  dividends,  good  title  and  a  contract  from 
Government,  which  as  to  business  equity,  mutuality  and  certainty 
will  conform  to  straightforward,  honest  business  precepts. 

Stores  and  factories  can  be  started  on  a  modest  scale  and  in- 
creased according  to  the  growth  of  business.  This  is  not  so  with  a 
water  power  plant.  About  90  per  cent  of  the  ultimate  expenditure 
must  usually  be  made  at  the  outset  and  the  "dead  capital"  must  be 
carried  through  long  years  of  lean  business.  The  first  customers 
cannot  pay  rates  for  power  that  will  reimburse  the  owners  for 
their  whole  investment.  Their  rates  must  be  the  same  as  though 
the  power  plant  were  disposing  of  its  maximum  output.  So,  the 
above  mentioned  items  representing  war  risk  insurance  must  here 
be  included  under  "lean  year  insurance." 

Water  power  is  useless  without  market  and  market  is  full  of 
whims.  Mills,  factories  and  mines  close  down  or  reduce  output 
in  times  of  poor  business,  and  this  results  in  reduced  power  con- 
sumption; railroads  operated  by  hydro-electric  power  carry 
lighter  loads.  The  householder,  in  times  of  business  depression, 
uses  fewer  lights,  and  is  more  careful  about  turning  them  out 


THE  WATER  POWER  BUSINESS  AND  ITS  RISKS  43 

when  they  are  not  actually  required.  Even  the  heavens  sometimes 
intervene;  the  hydro-electric  systems  of  the  West  which  operate 
pumps  for  irrigation  duty  find  their  revenues  enormously  reduced 
if  the  fields  are  blessed  with  a  season  of  abundant  rains.  In  such 
cases  the  farmers  do  not  need  power  for  irrigation  purposes — an 
advantage  to  the  farmer,  but  none  the  less  disturbing  in  the  diffi- 
cult financial  operation  of  a  power  system.  There  are  whims  with- 
out number  and  each  and  all  demonstrate  the  need  for  "market  in- 
surance." 

Thus  the  power  business  requires  generous  consideration  at  the 
hands  of  Government.  It  should  not  be  inferred  from  this  state- 
ment that  the  author  advocates  license  of  corporate  abuse  or  relax- 
ation  in  any  degree  of  public  control.  Neither  docs  he  seek  to  con- 
done any  unlawful  or  unrighteous  practice.  The  point  is  that  as 
all  these  risks  are  natural  and  inevitable,  and  as  the  water  power 
business  must  always  be  beset  with  more  financial  hazards  than 
any  other  conservative  business,  the  Government  must,  if  it  would 
encourage  investment  therein,  extend  to  capital  a  definite  and 
plain  contract  or  franchise,  leaving  no  loophole  through  which 
the  public  interest  may  be  abused  and  relaxing  in  no  respect  the 
sovereign  power  of  the  people,  but  at  the  same  time  putting  no 
burdens  on  the  development  on  public  lands  or  on  navigable 
streams  that  are  not  also  borne  by  developments  that  are  not  sub- 
ject to  Federal  jurisdiction.  The  investment  banker  who  disposes 
of  securities  to  his  clients  is  and  musl  be  as  mindful  of  those 
clients'  interests  as  are  physicians  or  lawyers  with  respect  to  the 
interests  <>f  their  clients.  The  investment  banker's  reputation  is 
;is  dear  to  him  iis  is  the  reputation  of  any  other  practitioner  t<> 
himself,  lie  musl  look  beyond  the  face  of  a  paper  offered  as 
security  for  a  loan.  He  musl  be  satisfied  that  the  maker  of  that 
security  is  able  to  sustain  the  obligations  entered  upon.  Me  notes 
tin-  water  power  hazards  above  discussed  and  he  rightfully  de- 


14  THE  WATER   POWER   PROBLEM 

mands  that  if  his  clients  must  sustain  those  hazards  they  must,  on 
the  other  hand,  have  a  good  title,  a  fair  chance  for  an  assured  re- 
turn of  principal  and  reasonable  interest  and  that  the  terms  and 
conditions  written  into  the  franchise  shall  be  definite  and  without 
unnecessary  financial  peril — that  the  occupation  of  the  land  is  a 
matter  of  right  and  not  of  grace. 


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WATER    POWER    OWNERSHIP   AND 

CONTROL 


The  author  has  in  years  past  been  interested  by  the  startling 
statements  made  in  the  press,  from  the  platform,  and  in  legislative 
halls,  concerning  a  "country-wide  water  power  monopoly."  Dur- 
ing the  past  two  years  he  has  diligently  sought  for  such  a  monop- 
oly and  has  found  that  such  a  condition  can  not  occur  in  the 
"country  wide"  hydro-electric  field.  In  the  first  place  it  is  absurd 
to  think  of  competition  or  restraint  of  trade  between  a  hydro- 
electric field  in  New  York  and  another  in  Montana.  There  can 
be  no  commodity  control  as  between  the  two  places  because  the 
use  of  the  power  or  service  generated  in  one  field  is  relatively  local 
in  that  field.  In  the  second  place,  the  public  controls  in  all  cases, 
either  by  direct  supervision  through  Public  Service  Commissions 
or  through  the  terms  of  public  charter  which  can  always  be  re- 
voked on  violation. 

Considering  now  the  local  field  of  distribution  alone,  the  water 
power  business  is  a  natural  monopoly  and  can,  in  the  public  inter- 
est, be  nothing  else.  In  this  respect,  water  power  is  in  no  wise 
different  from  our  Post  Office  Department,  our  city  water  sup- 
plies or  sewerage  systems.  Can  one  imagine  two  competing  sewer- 
age  systems  in  n  community?  The  absurdity  is  uo  greater  than 
competing  water  power  systems.  On  this  point  one  can  do  no  bet- 
ter than  to  quote  from  authoril ies. 

From  the  report  of  the  National  Waterways  Commission  (S. 
Doc.  No.  469,  62d  Cong.,  2d  Sess.)  : 

"The  important  fact  to  be  gathered  from  the  entire  discussion  of 
this  phase  of  the  subject  would  seem  to  be  not  so  much  that  financiers 
and  promoters  might   And   11   to  their  advantage  to  promote  a  monopoly 


46  THE  WATER    POWER    PROBLEM 

as  that  the  economical  considerations  and  the  natural  character  of 
the  business  make  monopoly  almost  inevitable,  and  perhaps  desirable, 
when  subject  to  strict  public  regulation." 

From  the  testimony  of  Hon.  Walter  L.  Fisher,  then  Secretary  of 
the  Interior,  before  the  National  Waterways  Commission,  Novem- 
ber 23,  1911 : 

"I  think  hydro-electric  development  is  essentially  monopolistic  and 
should  be  essentially  monopolistic  in  its  character.  That  is  why  I 
think  it  should  be  effectively  regulated.  I  think  they  should  have  the 
advantage  of  the  control  of  the  market  and  the  freedom  from  harass- 
ing and  vexatious  competition  if  we  are  going  to  put  them  under  the 
disadvantages  of  effective  public  regulation." 

From  the  testimony  of  Mr.  Gifford  Pinchot,  before  the  National 
Waterways  Commission,  November  23,  1911 : 

"I  am  very  strongly  in  favor  of  the  consolidation  of  water  power 
plants,  coupling  them  up  over  large  areas  *  *  *.  Better  service 
to  the  community  would  be  forthcoming  if  water  power  companies 
operated  over  large  areas.  But  there  must  be  public  control  of  their 
operations  to  prevent  the  benefits  which  would  come  by  reason  of 
such  consolidation  from  being  translated  into  a  general  overcharge 
to  the  consumer." 

By  Hon.  B.  H.  Meyer,  member  of  the  Interstate  Commerce  Com- 
mission (the  American  Political  Science  Review  for  August,  1911, 
p.  374)  : 

"There  are  few  things  which  the  industrial  history  of  advanced 
nations  proves  more  conclusively  than  that  competition  in  the  field 
of  public  utilities  has  failed  to  insure  reasonably  adequate  service  at 
reasonable  rates.  The  public  has  had  occasion  to  learn  this  lesson 
many  times  on  a  large  scale  *  *  *.  Certainly  we  have  had  enough 
repetition  of  disasters  to  the  public  as  well  as  to  investors  to  lift 
this  subject  out  of  the  field  of  controversy;  but  somehow  these  lessons 
have  not  been  on  a  sufficiently  large  and  overwhelming  scale,  for 
the  fetish  of  competition  is  still  being  worshipped,  and  the  cry  of 
competition  is  still  raised  by  many  as  the  touchstone  capable  of 
dissolving  every  obscure  entanglement  which  the  strained  relations 
between   the  utilities  and  the  public  sometimes   create. 


OWNERSHIP  AND  CONTROL  47 

"The  Wisconsin  public  utilities  law  is  a  repudiation  of  the  fallacy 
of  competition  as  a  guarantor  of  good  service  at  reasonable  rates  and 
is  planted  squarely  upon  the  ideas  of  monopoly  in  the  utility  business 
except  in  the  case  of  telephones.  Give  a  utility  plant  a  definite  field 
and  compel  it  to  do  its  proper  work  reasonably  well  within  that  field; 
this  is  one  of  the  basal  ideas  in  the  law." 

And  finally,  President  Wilson  in  an  address  before  the  students 
of  the  University  of  California  in  1911,  said : 

"Public  service  corporations  are,  in  a  very  interesting  sense,  natural 
monopolies  *  *  *.  It  is  perfectly  obvious  that  if  other  companies 
are  allowed  to  compete  with  them  there  is  a  wasteful  duplication  in 
outlay  and  equipment,  so  that  competition  generally  results  in  the 
eventual  combination  of  the  competing  companies  and  the  necessity 
to  charge  a  price  on  what  they  supply  that  will  pay  the  interest  on 
twice  as  great  an  investment  as  was  really  necessary  for  the  service." 


WATKR    POWKR    LEGISLATION 


The  Sixty-third  Congress  gave  much  consideration  to  water 
power,  yet,  because  of  divers  conditions  and  complications,  failed 
to  enact  any  law.  Two  bills  had  passed  the  House  and  were  on  the 
Senate  Calendar  when  the  Congress  closed.  H.  R.  16053,  known 
as  the  "Adamson- Shields  Bill,"  covered  water  power  development 
on  the  navigable  rivers.  H.  R.  16673,  known  as  the  "Ferris  Bill," 
related  to  power  sites  on  the  Public  Lands.  These  bills  differed 
materially  because  they  related  to  entirely  different  situations.  It 
will  not  be  practicable  to  discuss  these  bills  in  detail  nor  to  set 
forth  all  their  merits  and  demerits.  It  will,  however,  be  helpful  to 
review  certain  parts  of  them  because  they  will  illustrate  most  con- 
cisely the  important  features  of  the  discussion.  For  convenience, 
copies  of  these  two  bills  are  placed  in  the  Appendix. 

Navigable  Stream  Legislation. — As  amended  and  passed  by  the 
House  of  Representatives,  the  Adamson  Bill  was  a  mere  waste  of 
time  and  paper.  In  many  respects  it  promised  to  the  investor  far 
less  security  and  much  more  burdensome  restrictions  than  the 
present  General  Dam  Act  of  1910,  under  which  water  power  de- 
velopment has  become  practically  stagnant.  For  an  extended  dis- 
cussion of  the  defects  of  the  Bill  the  reader  is  referred  to  Senate 
Document  No.  570,  Sixty-third  Congress,  Second  Session,  entitled 
"Development  of  Water  Power;  Comments  Relative  to  H.  R. 
16053."  The  Commerce  Committee  of  the  Senate,  to  whom  the 
House  Bill  was  referred,  made  material  changes  and,  while  retain- 
ing many  of  the  fundamental  principles  upon  which  the  Adamson 
Bill  was  based,  partially  eliminated  the  unworkable  portions  and 
added  many  new  beneficial  features.  The  "Adamson-Shields  Bill," 
as  finally  reported,  had  the  unanimous  approval  of  the  Committee. 


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WATER  POWER  LEGISLATION  49 

The  "Adamson-Shields  Bill"  gives  the  Secretary  of  War  author- 
ity to  approve  the  construction  of  dams  and  water  power  plants 
in  the  navigable  streams,  upon  the  grantee's  compliance  with  the 
terms  of  the  Act  and  the  Departmental  rules  and  regulations  there- 
under.    The  specific  terms  may  briefly  be  recited  as  follows: 

1.  The  grantee  must  possess  suitable  qualifications  under  laws 
of  the  State  in  which  the  structure  is  to  be  erected,  must  promptly 
start  and  diligently  perform  the  work  within  specified  periods. 

2.  The  grantee's  right  to  occupy  the  site  extends  for  50  years, 
and  until  the  Lmited  States  takes  over  the  property  upon  payment 
of  the  fair  value  thereof,  which  fair  value  shall  not  include  any 
value  of  the  right  or  franchise  granted  by  the  Government.  Thus 
the  Government  has  the  option  at  the  end  of  the  50-year  period 
to  (a)  operate  the  property,  (b)  renew  the  grant  to  the  original 
grantee  on  mutually  satisfactory  terms,  or  (c)  convey  the  prop- 
erty to  a  new  grantee. 

3.  The  grantee  is  required  to  pay  the  United  States:  (a)  for 
the  <<>st  of  investigation  and  supervision  of  construction  by  the 
Department;  (b)  for  benefits  derived  from  headwater  improve- 
ments of  every  kind  made  at  Government  expense;  (c)  for  all 
hinds  of  the  United  States  occupied  by  the  grantee,  the  charge  to 
be  in  the  form  of  annual  tax  or  rental  determined  by  the  Secretary. 
All  other  taxes  are  left  to  the  States  and  municipalities  involved. 

4.  All  plans  must  receive  the  approval  of  the  Secretary  of  War, 
and  he  is  directed  to  approve  only  those  which  are  best  adapted  to 
expedite  and  utilize  the  water  resources  of  the  region  in  the  most 
useful  way.  The  plant  must  be  operated  under  the  direction  and 
control  of  the  Secretary  of  War.  with  due  regard  for  the  interests 
of  navigation.  As  a  condition  of  approval,  the  Secretary  may,  at 
the  time  of  approval,  require  the  grantee  to  construct  locks  and 
ot  her  nnvigat  ion  facilil  ies,  all  of  which  become  a  part  of  compensa- 
tion to  Government  for  the  rights  enjoyed. 

Ill, 


50  THE  WATER    POWER    PROBLEM 

5.  In  case  of  dams  built  by  the  Government,  the  Secretary  of 
War  is  given  authority  to  lease  the  surplus  power  on  such  terms 
as  may  be  for  the  best  interests  of  the  United  States. 

6.  The  bill  provides  for  reserving  the  right  to  regulate  rates 
and  service  in  the  case  of  interstate  business;  for  reasonable  rates 
and  efficient  service  under  all  conditions;  for  full  regulation  by 
Secretary  of  War  within  States  which  have  provided  no  regu- 
latory functions. 

7.  Complete  penal  section  is  provided  under  which  every  neces- 
sary executive  and  judicial  act  may  be  taken  to  secure  full  and 
complete  compliance  with  all  laws  and  regulations. 

Power  developments  on  navigable  streams  by  private  capital 
would  improve  navigation  and  render  the  streams  navigable  for 
further  distances  into  the  interior  of  the  country.  This  would 
not  only  benefit  the  whole  public  through  increased  transportation 
facilities,  but  would  relieve  the  Government  of  the  cost  of  making 
navigation  improvements  at  the  expense  of  the  Treasury. 

Public  Lauds  Water  Power  Legislation.— The  water  powers  of 
the  public  lands  of  the  West  were  much  debated  during  tlie  Sixty- 
third  Congress.  In  May  and  in  December,  1914,  hearings  on  the 
so-called  "Ferris  Bill,"  H.  R.  16673,  were  held  by  the  Public 
Lands  Committees  of  the  House  of  Representatives  and  the  Sen- 
ate, respectively.  There  appeared  at  the  time  to  be  much  diversity 
of  opinion,  though  close  analysis  shows  that  all  were  contending 
for  the  same  fundamental  things.  One  side  comprised  those  who, 
as  public-spirited  citizens,  had  studied  the  question  in  an  academic 
way  and  desired  legislation  that  would  protect  the  public  interest. 
They  frankly  confessed  that  they  had  no  practical  experience  in 
the  water  power  business  either  from  the  investment,  the  operative 
or  the  construction  standpoints.  The  other  side  was  represented 
by  practical  water  power  men  who  bad  given  long  years  to  the 
construction    and   operation    of   hydro-electric   systems;   also    by 


WATER  POWER  LEGISLATION  51 

financiers,  bankers  and  investors  who  were  well  informed  from 
practical  experience  on  that  phase  of  the  water  power  question. 
Thus  there  were  the  doctrinaires  on  the  one  side  and  the  practi- 
tioners on  the  other.    What  was  the  trend  of  their  testimony? 

The  practitioners  were  in  thorough  agreement  with  the  doc- 
trinaires as  to  the  regulation  of  water  power  practices  and  the 
protection  of  the  public  interest,  They  disagreed  only  upon  one 
general  point,  viz. :  the  practitioners  insisted  that  the  public  in- 
terest could  be  protected  without  making  water  power  investment 
impossible  or  a  speculative  thing  at  best ;  that  the  legislation  upon 
which  the  doctrinaires  insisted  would  result  in  the  immediate  de- 
preciation of  every  dollar  expended  in  water  power  development. 
So  far  as  the  author  is  able  to  learn,  not  a  single  engineer  of  prac- 
tical experience,  nor  an  operator,  nor  a  financier  appeared  in  favor 
of  the  so-called  Ferris  Bill  as  it  was  introduced  into  the  House  of 
Representatives,  favorably  reported  by  House  Committee  and 
passed.  Can  it  be  possible  that  all  of  those  experienced  men  were 
mistaken,  or  can  it  be  believed  that  they  all  deliberately  falsified? 
The  author  thinks  not.  In  every  walk  of  life  we  are  guided  by  the 
weight  of  experience.  Can  there  be  any  doubt  that  the  practical 
men  who  testified  concerning  practical  things  were  better  qualified 
for  such  testimony  than  were  the  doctrinaires?  One  who  sits  in 
impartial  judgment  and  who  duly  regards  the  weight  of  evidence 
in  this  matter  is  bound  to  arrive  at  one  of  two  conclusions;  either 
the  practical  men  were  right,  or  the  practical  men  deliberately 
attempted  to  deceive  Congress.  Does  anyone  seriously  believe  in 
the  second  conclusion?  Please  remember  in  answering  this  ques- 
tion that  the  points  at  issue  were  not  those  of  mere  policy,  nor  did 
they  involve  any  theorizing  on  prospective  events.  All  were 
in  agreement  as  to  the  results  to  be  accomplished  in  the  public 
interest.  In  all  the  public  testimony  and  expressions  of  opinion 
that  I  have  seen,  the  doctrinaires  have,  without  exception,   been 


THE  WATER    POWER    PROBLEM 

liberal  in  their  views  as  to  the  return  which  they  believed  the  water 
power  investor  justly  entitled  to  receive  There  were  no  differ- 
ences whatever  as  to  what  the  final  result  ought  to  be  with  respect 
to  all  parties  concerned.  The  only  differences  were  as  to  the 
language  in  the  bill  necessary  to  accomplish  the  purpose  upon 
which  all  were  in  agreement.  These  differences  involved  plain 
matters  of  business  security,  the  principles  underlying  which 
were  settled  centuries  ago.  All  will  admit  that  the  doctrinaires 
were  sincere  and  their  motives  patriotic,  but  when  wre  come  to 
a  choice  between  experience  and  inexperience  it  seems  certain  that 
the  world  will  finally  be  governed  by  the  findings  of  experience. 

The  "Ferris  Bill"  as  passed  by  the  House  of  Representatives, 
was  built  up  on  the  assumption  that  Federal  ownership  of  land, 
necessary  to  water  power  development,  carries  with  it  the  owner- 
ship or  at  least  the  right  to  control  the  use  of  the  water  and  the 
right  to  impose  a  Federal  tax  and  any  other  conditions,  without 
limit,  on  the  power  developed  by  the  water.  The  ownership  and 
regulation  of  water  in  the  West  has,  by  State  constitution,  State 
statute  and  common  consent,  for  many  years  been  regarded  as 
vested  in  the  several  States.  In  the  Western  States  the  doctrine 
of  the  appropriation  of  water  for  actual  beneficial  use  prevails, 
as  against  the  Eastern  riparian  doctrine  that  the  abutting  prop- 
erty owner  can  require  the  water  to  flow — and  waste — as  it 
is  wont  to  flow,  as  against  the  claim  of  someone  who  desires  to 
put  the  water  to  beneficial  use.  The  appropriation  doctrine  of  the 
arid  States  is  the  child  of  necessity,  where  water  is  as  precious 
as  the  air  and  where  practically  every  use  of  water  is  both  a  public 
and  beneficial  use.  Under  the  "Ferris  Bill,"  Federal  owner- 
ship of  even  a  minute  portion  of  the  land  necessary  for  power 
development  would  mean  Federal  control  which  would  cover  or 
markedly  influence  the  taxation  of  all  of  the  remainder  of  the 
property  used  in  the  power  site,  whether  its  ownership  be  State  or 


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WATER  POWER  LEGISLATION  53 

private.  Almost  every  feature  controlling  the  integrity  of  the  in- 
vestment and  the  stability  of  public  service,  including  the  raising 
of  Federal  revenue,  was,  according  to  this  bill,  to  be  fixed  by  the 
discretion  of  an  appointive  official — the  Secretary  of  the  Interior — 
who  has  no  sovereign  powers,  whose  opinions  do  not  commit  the 
Government,  nor  does  the  opinion  of  any  particular  occupant  of 
that  office  commit  his  successors  therein.  One  of  the  confessed 
objects  of  the  bill  was  to  make  it  possible  for  the  Secretary  of  the 
Interior  to  impose  discriminatory  rentals  or  taxes  in  accordance 
with  his  judgment,  or  his  preferences  in  any  particular 
case,  all  of  which  is  diametrically  opposed  to  the  funda- 
mental American  doctrine  of  equality  before  the  law.  Because  of 
the  financial  uncertainties  imposed,  every  investment  made  under 
the  House  bill  would  be  highly  speculative  and  no  water  powers 
could  be  developed  except  at  great  risk  and  under  conditions  which 
will  permanently  put  great  and  wholly  unnecessary  burdens  upon 
the   people  and  throttle  the  growth  of  the  Western  States. 

As  the  bill  was  reported  out  of  Committee  in  the  Senate,  it  re- 
tained, though  to  a  modified  extent,  the  fundamental  assumption 
in  the  House  bill  that  Federal  ownership  of  land  may  properly 
become  a  pretext  for  the  control  of  the  use  of  water  owned  by  the 
State.  Much  of  the  absolute  discretionary  power  conferred  upon 
the  Secretary  of  the  Interior  by  the  House  bill  was  removed  by  the 
Senate  Committee  and  the  equivalent  stipulations  were  either 
fixed  in  the  bill  or  left  to  the  sovereign  discretion  of  the  States. 
As  a  whole,  the  Senate  bill  is  remarkably  improved — so  much  im- 
proved, in  fact,  thai  its  few  fatal  defects  seem  ;ill  the  more  regret- 
table.    Among  them  are  the  following: 

1.  The  last  proviso  of  Section  1  requires  that  no  lease  shall  be 
granted  until  the  applicant  has  secured  the  water  right  from  the 
State  wherein  the  project  is  to  be  located.  In  many,  if  not  all  of 
the  Slates  of  the  West,  wafer  rights  cannot  be  perfected  until  bene 


M  THE  WATER   POWER    PROBLEM 

ficial  use  has  been  made  of  the  water.  Therefore,  the  power  devel- 
oper would  be  in  the  peculiar  position  of  being  unable  to  secure  a 
Federal  lease  until  he  had  procured  a  State  water  right,  and,  on 
the  other  hand,  of  being  unable  to  secure  the  State  water  right 
until  he  had  acquired  and  developed  under  the  Federal  lease.  This 
difficulty  would  be  well  met  by  providing  that  the  applicant  must, 
previous  to  securing  the  Federal  lease,  have  initiated  water  rights 
under  the  laws  of  the  State. 

2.  Section  3  provides  that  authority  for  the  regulation  of  rates 
And  service  and  the  supervision  of  the  issuance  of  stock  and  bonds 
shall,  in  interstate  cases,  be  vested  in  the  Interstate  Commerce 
Commission.  Some  legal  objections  have  been  made  to  this,  the 
soundness  of  which  the  author  is  not  qualified  to  discuss.  The 
practical  objection  is  that  interstate  regulation  of  electric  service 
and  the  financing  should  not  be  confined  merely  to  those  water 
power  plants  which  occupy  public  domain  in  whole  or  in  part.  Tf 
the  time  has  come  for  the  Federal  Government  to  regulate  this  in- 
dustrv,  then  it  is  obvious  that  such  regulation  should  be  applied 
upon  identical  terms  to  all  interstate  service,  whether  the  plants 
occupy  public  or  private  lands,  or  whether  the  electric  power  be 
generated  by  water,  by  steam,  by  gas  or  in  any  other  manner.  Any 
other  procedure  unjustly  discriminates  against  and  renders  vastly 
more  difficult  the  development  of  water  powers  on  Government 
lands  as  compared  with  those  on  private  lands.  Why  should  the 
occupant  of  a  right  of  way  over  Federal  land  be  subjected  to  class 
legislation?  Why  should  the  amenability  of  a  power  developer 
to  the  law,  and  the  consequent  jurisdiction  of  the  Courts  over  his 
business,  depend  upon  whether  his  pipe  line  goes  over  or  around 
a  few  feet  of  Government  land?  Is  it  better  for  Congress  to  settle 
all  these  matters  by  general  laws,  or  that  every  individual  shall 
be  left  free  in  this  bill  to  vary  his  pipe  location  and  thus  settle 
these  questions  as  he  may  elect? 


WATER  POWER  LEGISLATION  55 

3.  Section  6  contains  a  provision  the  real  purport  of  which 
was  probably  not  intended  by  the  reporting  committee.  In  any 
event,  the  provision  directly  violates  the  standards  which  the  com- 
mittee has  established  in  other  parts  of  the  bill,  viz. ;  that  the  in- 
vestor shall  have  definite  and  well-defined  security.  The  section 
provides  that  if  at  the  end  of  the  50-year  lease  period,  the  United 
States  does  not  exercise  its  right  to  take  over  the  properties,  and 
does  not  renew  the  lease  to  the  original  lessee,  nor  issue  a  lease 
to  a  new  party,  who,  on  receipt  thereof  shall  reimburse  the  original 
lessee  for  the  fair  value  of  his  property,  the  said  original  lessee 
may,  "at  his  option,"  retain  the  lease  on  such  terms  and  conditions 
as  may  be  in  force  at  the  time  of  lease  expiration.  What  is  this 
option?  It  is  (a)  to  accept  the  lease  on  such  new  terms  as  may 
then  be  in  force  or  (b)  abandon  the  property.  This  is  precisely 
equivalent  to  saying  to  a  drowning  man  "sink  or  swim."  Remem- 
ber that  in  the  premises  set  forth,  the  United  States  fails  or  re- 
fuses to  take  over  the  property,  fails  or  refuses  to  renew  the 
lease  to  the  original  lessee  and  fails  or  refuses  to  lease  to  a  third 
party  who  will  pay  for  the  property.  Then  comes  the 
option,  "sink  or  swim,"  or,  in  other  words,  "take  what  I 
give  you  or  abandon  your  property."  Please  apply  this  principle 
to  a  lease  of  ground  for  the  erection  of  a  twenty-story 
building,  in  which  lease  it  is  stipulated  that  the  lessee  shall 
spend  $1,000,000  for  the  building,  and  at  the  expiration  of  the 
lease  will  (a)  be  reimbursed  for  the  then  fair  value  of  such  im- 
provements, or  (b)  receive  a  renewal  of  the  lease,  or  (c) — here 
comes  the  "sink  or  swim"  provision — will  be  given  a  new  lease 
upon  such  terms  as  the  lessor  may  at  that  time  be  granting  gen- 
erally to  other  lessees.  Evidently,  such  a  lease  would  give;  no  se- 
curity to  large  invested  capital.  This  should  be  remedied  by  pro- 
viding that  if  the  Government  does  not  exercise  its  right  to  take 
over  or  to  renew  the  lease  at  the  end  of  the  lease  period,  the  orig- 


56  THE  WATER  POWER  PROBLEM 

inal  lease  shall  continue  until  the  Government  does  exercise  this 
right. 

4.  The  proviso  in  Section  7  excludes  "going  concern"  as  one  of 
the  elements  of  value  which  cannot  be  taken  into  consideration 
when  the  property  is  taken  over  by  the  Government.  Justice  of 
such  an  exclusion  all  depends  on  the  framers'  meaning  of  the  term 
"going  concern."  The  Supreme  Court  decided  in  the  Omaha  case 
(218  U.  S.,  180)  that,  properly  interpreted,  the  term  is  applied  to 
the  product  of  legitimate  cash  expenditure.  Therefore,  the  exclu- 
sion of  "going  concern"  means  confiscation  of  a  portion  of  the 
property  and  under  such  conditions  no  prudent  investor  will  buy 
the  securities.  Whatever  may  be  the  principal  significance  of  this 
or  anv  other  term,  it  is  manifest  that  the  Courts  have  uniformly 
excluded  claims  for  values  not  actually  represented  in  the  property 
taken  over.  Therefore,  it  is  both  needless  and  dangerous  to  ex- 
clude off-hand  a  set  of  values  which  are  likely  to  be  thoroughly 
legitimate. 

5.  Section  7  of  the  bill  provides  that  no  lessee  may  execute  con- 
tracts for  the  sale  and  delivery  of  electrical  energy  for  periods  ex- 
tending in  excess  of  twenty-five  years  beyond  the  50-year  period 
of  the  lease.  This  gives  a  margin  of  75  years  for  a  contract  if  the 
same  is  made  at  the  beginning  of  the  lease  term,  which  would  prob- 
ably be  sufficient  except  for  very  large  and  expensive  industrial 
works,  such  as  electro-chemical  and  electro-metallurgical  plants; 
also  for  railroad  electrification  and  large  irrigation  systems,  both 
of  which  must  have  power  for  all  time.  All  of  these  would  be 
practically  excluded,  or  at  any  rate  greatly  deterred  by  the  provi- 
sion here  discussed.  Another  serious  consideration  lies  in  the  fact 
that  at  the  end  of,  say,  40  years  of  the  lease  period,  the  lessee  would, 
under  no  circumstances,  be  able  to  enter  into  contract  with  a  con- 
sumer for  a  period  longer  than  thirty-five  years.  This  is  a  very 
heavv  burden  which  cannot  be  borne  by  the  hvdro-electric  indus- 


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WATER  POWER  LEGISLATION  57 

try  without  serious  detriment.  It  is,  so  to  speak,  a  placing  of 
shackles  upon  legitimate  and  praiseworthy  industrial  develop- 
ment; it  greatly  injures  both  the  power  investor  and  the  con- 
sumers of  the  power.  Whom  does  it  benefit?  The  duration  and 
the  terms  of  contracts  extending  beyond  the  lease  period  should  be 
approved  in  all  cases  by  the  duly  constituted  State  authorities. 

6.  Section  8  provides  that  the  rentals  for  Government  lands 
may,  in  the  discretion  of  the  Secretary  of  the  Interior,  be  based 
on  the  power  developed  at  any  site  involving  Government  lands. 
This  is  a  direct  Federal  tax  on  power  production — a  tax  on  West- 
ern development.  It  is  wrong  in  principle.  The  Government 
holds  its  land  as  proprietor  and  the  rentals  for  that  land  should 
be  on  the  basis  of  the  value  of  the  land.  In  other  words,  the  Gov- 
ernment should  receive  fair  remuneration  for  the  use  of  its  land, 
but  the  Government  cannot,  in  fairness,  use  the  power  of  might 
to  extort  from  the  Western  communities  a  higher  rental  than 
would  be  allowed  for  the  same  land   were  it  privately  owned. 

There  can  be  no  essential  difference  in  equity  between  the  basis 
of  compensation  to  be  paid  to  the  Government  for  the  use  of  its 
lands  and  that  underlying  the  compensation  paid  to  Farmer  Jones. 
If  the  land  occupied  by  a  water  power  development  is  owned  in 
part  by  the  Government  and  in  part  by  Farmer  Jones,  the  land  as 
a  whole  has  a  well-defined  value  for  power  purposes.  Farmer 
Jones  should  receive  as  much,  and  no  more  per  unit  of  actual  value 
contributed  for  his  land  than  the  Government  receives,  and  con- 
versely the  Government  is  entitled  to  compensation  on  exactly  the 
same  basis  as  that  given  to  Farmer  Jones.  If,  however,  the  Govern- 
ment is  compensated  on  the  basis  of  power  delivered  at  a  rate  to  be 
determined  in  the  case  of  each  lease  by  an  administrative  officer,  it 
will  certainly  occur  that  in  many  cases  the  lessee  will  be  paying 
the  Government  a  price  which,  if  extended  to  cover  all  the  land 
involved  in  the  site,  would  render  the  power  project   a   financial 


58  THE  WATER    POWER    PROBLEM 

impossibility.  In  such  event,  Parmer  Jones  and  his  neighbors — 
who  may,  perhaps,  own,  say,  94  per  cent  of  the  land  necessary 
for  the  complete  power  development — will  be  unable  to  sell  or 
use  their  water  power  lands.  Clearly,  this  is  in  effect  equiva- 
lent to  the  confiscation  of  the  water  power  lands  of  Farmer  Jones 
and  his  neighbors  through  the  exercise  of  the  arbitrary  right 
of  might  by  the  Federal  Government,  owning  in  this  case  only 
6  per  cent  of  the  power  site  lands. 

7.  Section  17  provides  that  in  cases  where  a  lessee  proposes  to 
occupy  a  power  site  containing  5  per  cent  or  less  of  Government 
land,  the  Secretary  of  the  Interior  may,  in  his  discretion,  waive 
such  terms  of  the  Act  as  he  may  think  best  and  impose  such  new 
terms  and  rentals  as  he  may  deem  just.  Why  5  per  cent?  Upon 
what  principle  is  5  per  cent  exempted  rather  than  6  per  cent,  7  per 
cent  or  some  other  ratio?  Or  was  this  figure  selected  upon  any 
principle?  The  fundamental  defect  in  the  "Ferris  Bill"  as  passed 
by  the  House  was  its  indefiniteness  from  the  investment  stand- 
point. It  left  to  the  discretion  of  an  administrative  officer  the  de- 
termination of  many  points  vital  to  the  integrity  of  the  water 
power  investment.  This  section  establishes  in  a  most  extreme 
form,  this  unbridled  discretionary  power  which  the  committee 
largely  eliminated  from  the  preceding  sections  of  the  bill.  Irre- 
spective of  the  proportion  of  Government  land  occupied,  whether 
it  be  five  per  centum  or  more,  the  Government  should  be  paid  a 
fair  rental  for  said  land  based  on  its  value  for  all  purposes.  Upon 
what  principle  of  equity  should  industry,  and  particularly  the 
struggling  agricultural  communities  of  the  arid  West,  be  forced 
to  pay  more? 

8.  Section  20  provides  that  the  lands  leased  and  the  works 
created  thereon  may  be  used  or  enlarged  by  another  person  than 
the  lessee  for  the  purpose  of  "impounding  water  for  irrigation, 
mining,  municipal,  domestic  and  other  beneficial  purposes."     In 


WATER  POWER  LEGISLATION  59 

other  words,  the  original  lessee  who  erects  a  dam  and  thereby  cre- 
ates a  fall  for  water  power  must,  in  case  he  can  not  use  all  the 
water  while  he  is  building  up  his  business,  donate  the  benefit 
of  that  improvement  to  one  who  may,  without  expenditure  for  a 
dam,  enter  into  destructive  competition,  possibly  for  purposes 
of  mere  blackmail.  It  is  only  fair  that  any  subsequent  developer 
who  makes  use  of  a  lessee's  structure  should  be  made  to  pay  the 
reasonable  proportionate  cost  of  the  benefits  which  he  acquires 
from  the  original  lessee's  structures. 

Three  other  water  power  bills  concerning  public  land  sites  were 
introduced  into  the  Sixty-third  Congress,  viz. :  S.  6712,  by  Senator 
Jones  of  Washington;  S.  7071,  by  Senator  Works  of  California, 
and  S.  7101,  by  Senator  Smoot  of  Utah.  It  will  be  instructive  to 
refer  briefly  to  these  bills  in  order  to  illustrate  the  points  of  view 
of  the  authors  and  to  compare  them  with  the  underlying  theory  of 
the  "Ferris  Bill." 

The  "Jones  Bill,"  S.  6712,  provides  for  a  grant  of  lands  for 
a  definite  period  under  stipulations  designed  to  protect  the  public 
interest,  said  grants  available  to  all  alike  who  comply  with  the 
law  as  enacted  by  Congress.  With  respect  to  the  moot  question 
of  Federal  vs.  State  sovereignty,  the  bill  avoids  extremes  in  either 
direction.  It  leaves  to  the  United  States  the  present  and  future 
control  and  disposition  of  the  public  lands,  retaining  the  title 
therein  to  the  Nation  and  imposing  rentals  or  taxes  on  the  value 
of  the  land.  It  accords  to  the  States  the  exercise  of  their  own 
sovereignty  over  waters  and  the  operation  of  the  water  power 
plants,  except  in  so  far  as  the  same  may  interfere  with  navigation. 
The  bill  is  entirely  practicable  from  the  investmenl  standpoint 
and  its  passage  would,  without  doubt,  be  rapidly  followed  by 
great  power  developments. 

The  "Works  Bill,"  S.  7071,  was  drafted  on  the  conception  that 
the  ownership  and  control  of  water  by  the  State  is  the  main  inei- 


60  THE  WATER  POWER  PROBLEM 

dent  in  the  granting  of  a  water  power  concession  or  franchise,  and 
thai  the  land  owned  by  the  United  States  is  a  somewhat  subordi- 
nate feature,  the  ownership  of  which  confers  on  the  Federal  Gov- 
ernment no  more  sovereignty  than  would  the  land  of  a  private  citi- 
zen confer  sovereignty  on  him ;  that  the  United  States  cannot,  by 
mere  stipulation  with  a  willing  grantee,  deprive  a  State  of  com- 
plete sovereignty  over  the  use  of  its  water  or  over  its  purely  intra- 
state developments.  Accordingly,  the  Works  BiJl  provides  that 
the  United  States  shall  grant  the  use  of  its  land,  without  parting 
with  the  title  thereto,  said  grant  to  be  co-terminous  with  the 
grantee's  right  to  the  use  of  water.  The  rental  for  such  land  is 
based  on  the  value  of  the  land  and  whenever  it  is  no  longer 
needed  in  the  beneficial  use  of  the  water  under  the  State's 
authority,  the  land  reverts  to  the  Government.  The  bill  is 
financiallv  sound  and  investments  would  readily  be  made  there- 
under. 

The  "Smoot  Bill,"  S.  7101,  provides  for  the  acquisition  by  the 
State,  under  certain  conditions,  of  any  public  lands  chiefly  valua- 
ble for  water  power  development.  Any  State  possessing  a  public 
service  commission  or  its  equivalent,  could,  through  said  commis- 
sion, file  application  for  such  lands  and  receive  patent  thereon. 
Thereafter  the  State  could  not,  under  penalty  of  forfeiture  of  said 
lands,  alienate  the  fee  simple  title  or  utilize  the  lands  for  any 
other  purpose  than  that  of  power  development  and  operation.  The 
State,  or  those  authorized  under  its  laws,  must  develop  the  power 
and  place  the  water  to  beneficial  use  and  all  power  sold  or  deliv- 
ered therefrom  must  be  under  State  authority  as  to  rates  and 
services.  Thus  the  Smoot  Bill  is  based  in  part  on  the  same  prem- 
ises as  have  been  described  for  the  Works  Bill— that  the  beneficial 
use  of  the  State's  water  is  the  controlling  factor  and  that  mere 
ownership  of  land  is  a  mere  incident;  that  inasmuch  as  sover- 
eignty  over  the  water  is  vested  in   the  State,  said  State  and  its 


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WATER  POWER  LEGISLATION  Gl 

citizens  cannot  lawfully  be  deprived  of  the  incidents  necessary 
to  the  exercise  of  that  sovereignty,  nor  of  the  benefits  to  be  derived 
therefrom.  The  bill  is  the  antithesis  of  the  Federal  idea  set  up  in 
the  original  "'Ferris  Bill,"  and  if  passed  will  effectively  stimulate 
power  development.  It  is  a  simple  and  effective  measure  which  con- 
sistently sustains  the  long-established  American  theory  and  consti- 
tutional guarantee,  that  the  sovereign  States  shall  be  on  a  par  as 
to  conduct  and  regulation  of  their  internal  affairs. 

For  the  benefit  of  those  who  wish  to  make  critical  analyses  of 
the  several  bills  discussed  in  preceding  pages  there  is  inserted  in 
the  appendix,  first,  a  concise  comparative  parallel-column  state- 
ment of  the  provisions  of  the  "Adamson  Bill"  as  passed  by  the 
House  of  Representatives,  and  the  "Adamson-Shields  Bill"  as  re- 
ported to  the  Senate;  second,  similar  parallel-column  comparisons 
of  (a)  the  "Ferris  Bill"  as  passed  by  the  House  of  Representatives; 
(b)  as  reported  to  the  Senate;  (c)  the  "Jones  Bill"  and  (d)  the 
"Works  Bill."  ( Jopies  of  the  Jones,  the  Works  and  the  Smoot  Bills 
will  also  be  found  in  the  appendix  along  with  the  Adamson-Shields 
and  the  Ferris  Bills. 


CONCLUSION 


If  the  author  has  been  successful  in  expressing  his  beliefs,  it 
must  be  apparent  that  he  has  not  been  contending  for  a  water 
power  law  that  deprives  the  people  of  any  sovereignty,  nor  of  any 
property  rights  that  the  people  now,  or  in  the  future,  may  possess. 
Neither  docs  the  author  desire  that  any  water  power  grantee  or 
lessee  should  even  for  a  moment  be  exempt  from  sovereign  control 
nor  from  complete  regulation  in  the  public  interest.  His  con- 
tention is  that  the  Government  may  preserve  all  these  rights  and 
powers  and  still  do  business  on  an  honorable  and  constructive 
basis  with  the  investor  and  guarantee  to  him  a  mutual  contract 
that  will  not  deprive  him  of  the  security  of  his  investment. 

There  have  been  some  who,  in  reply  to  the  arguments  set  forth 
in  the  foregoing  pages  concerning  investment  security,  have  asked, 
"Why  cannot  the  investor  trust  the  Government  to  do  the  right 
thing  when  the  time  comes?"     There  are  two  answers  to  this,  viz. : 

1.  The  investor  has  learned  that,  in  dealing  with  Government, 
with  its  changing  administrations  and  shifting  policies,  he 
must  have  his  contracts  and  other  legal  instruments  as  air- 
tight as  though  he  were  dealing  with  a  private  party.  There  are 
many  cases  which  could  be  cited  in  support  of  this  contention  but 
the  ones  which  bear  more  directly  upon  the  subject  here  dis- 
cussed consist  of  the  revocation  of  twenty-five  water  power  permits 
by  a  Secretary  of  the  Interior  just  before  he  went  out  of  office  in 
March,  1909.  Under  some  of  the  permits  so  revoked  millions 
had  been  spent  and  the  plants  had  been  constructed  and 
were  in  operation.  There  was  no  allegation  in  any  of  these 
cases  that  the  permittees  had  violated  law  or  regulation 
or  had    in   any    way   failed    in    their   obligations  assumed    under 


CONCLUSION  63 

the  terms  of  the  permits;  nor  had  the  public  complained  in 
any  way  that  thev  were  not  being  faithfully  and  efficiently  seryed. 
The  plainly  stated  pretext  was  that  the  Department  had  made  new 
regulations  and  desired  to  bring  all  previous  permittees  under 
them.  Up  to  the  time  these  revocations  were  made,  investors 
had  not  been  suspicious  of  the  Act  of  1901,  notwithstanding  the 
fact  that  by  the  terms  of  that  Act,  permits  secured  thereunder 
were  reyokable  at  the  discretion  of  the  Secretary  of  the  Interior. 
The  investors  had  been  advised  by  well-qualified  legal  authorities 
that  construction  and  development  gave  them  a  vested  interest — 
an  interest  which  could  not  be  revoked  at  the  will  of  an  adminis- 
trative official.  There  was  also  a  comfortable  feeling  that  the 
Government  might  be  expected  to  set  the  example  in  the  matter 
of  good  faith  and  fair  dealing  and  investors  commonly  believed 
that  the  Government  would  not,  in  the  absence  of  misbehavior 
on  the  part  of  any  permittee,  revoke  a  permit  and  thereby  ruin 
the  credit  standing  of  a  water  power  company  and  subject  the 
security  holders  to  great  and  irreparable  loss.  Vet  these  unfor- 
tunate revocations  did  occur  and  numerous  ejectment  suits  are 
now  pending  in  the  Federal  Courts.  Confidence  in  such  permits 
or  implied  promises  of  Government  can  never  be  restored. 

It  should  also  be  mentioned  that  this  lack  of  trust  by  investors 
is  intensified  by  the  commercialized  muck-raking  in  periodicals, 
newspapers  and  on  the  public  platform,  which  has  been  aimed  at 
water  power  men  during  the  past  few  years.  .Mnck-raking  has 
become  an  avocation — a  matter  of  bargain  and  sale,  and  abuse  is 
applied  irrespective  of  guilt  or  innocence.  It  is  not  strange  that 
the  prudent  investor  backs  away  from  a  water  power  franchise 
based  on  Government  discretion  or  revocable  promise  instead  of 
on  a  Government  contract,  when  the  only  men  whose  water  power 
efforts  have  borne  fruit  are  the  very  ones  who,  irrespective  of  their 
deeds  or  intentions,  have  been  lumped  together  and  called  unclean 


64  THE  WATER  POWER  PROBLEM 

by  the  muck-rakers,  whose  sole  object  is  personal  gain  or  notoriety. 

2.  The  second  answer  to  the  foregoing  question  is  that  it  is 
necessary  that  a  Government  grantee  shall  be  able  to  rely  upon  a 
definite  grant  rather  than  upon  the  grace  of  the  ever  changing  ap- 
pointive officials.  The  Government  would  not  issue  a  bond  cloud- 
ed with  such  uncertainty,  and  in  like  manner  the  Government 
should  not  even  think  of  issuing  a  grant  under  which  the  grantee 
will  have  to  offer  an  uncertain  and  possibly  worthless  bond  to  the 
public.  That  which  the  Government  has  found  necessary  to  the 
integrity  of  its  own  securities  should  not  be  denied  those  who  have 
devoted  their  money  to  a  public  enterprise  and  are  working  under 
a  Government  concession  as  honest  and  faithful  public  servants. 

Confidence  in  water  power  investments  cannot  be  restored  by 
mud-slinging  speeches  and  writings.  We  cannot  hasten  the  day 
of  water  power  development  by  calling  each  other  fools  or  rogues, 
or  by  inciting  class  against  class  or  by  promoting  prejudices.  The 
man  who  is  skillful  enough  to  build  and  operate  a  water  power 
and  the  man  who  is  brave  enough  to  finance  it  are  surely  deserv- 
ing of  reward,  and  they  are  not,  by  such  acts,  necessarily  made 
over  into  thieves  and  oppressors  as  some  would  have  us  believe. 
On  the  other  hand,  the  man  who  stands  fast  for  a  fair  and  right- 
eous deal  to  the  public  is  not  a  charlatan  and  a  seeker  for  cheap 
notoriety,  as  others  would  have  us  believe. 

As  has  already  been  remarked,  all  parties  are  very  close  to- 
gether. Some  of  the  remaining  differences  are  mere  matters  of 
terminology.  Instead  of  "bawling  out"  a  proposal  merely  be- 
cause it  is  advanced  by  a  water  power  man,  would  it  not  be  better 
to  get  beneath  the  surface  and  judge  it  upon  its  merits?  Instead 
of  scoffing  at  another  proposal  merely  because  a  "conservationist," 
without  water  power  experience,  expresses  it,  let  us  see  whether 
it  does  not  have  that  estimable  advantage  of  perspective.  We  want 
water  power  development  as  soon  as  possible,  and  it  makes  not  a 


CONCLUSION  65 

shade  of  difference  who,  in  the  controversy  of  the  past  eight  rears, 
has  been  right  and  who  has  been  wrong.  The  cause  is  bigger  than 
any  man  or  group  of  men.    Let  us  forget  the  past  and  start  new. 

We  are  sure  of  a  few  things : 

1st.  That  it  is  not  safe  nor  ultimately  profitable  to  conduct 
an  industry  in  a  wrongful  manner;  this  is  one  of  the  axioms  of 
modern  business  and  the  successful  water  power  business  rests 
absolutely  upon  it. 

2d.  That  the  water  power  men  do  not  expect  to  get  from  the 
Goyernment  more  than  is  fair,  and  they  do  not  expect  to  conduct 
their  business  in  a  wrongful  manner.  If  they  had  other  expecta- 
tions or  intentions,  Congress  would  see  to  the  one  and  public  serv- 
ice commissions  to  the  other. 

3d.  That  there  will  be  no  water  power  development  commensu- 
rate with  the  resources  of  the  country  unless  Congressional  legisla- 
tion will  so  safeguard  development  as  to  encourage  investors  to 
put  their  savings  into  water  power  enterprises  and  thus  permit 
water  power  companies  to  obtain  ample  capital  at  reasonable  rates. 

4th.  Thai  Congress  and  tin1  various  State  legislatures  can  con- 
trol water  power  companies  engaging  in  public  service  business — 
can  control  their  rates  and  service — and  it  is  not  necessary  to 
impose  conditions  hindering  or  restricting  development  and  the 
acquisition  of  capital  in  order  to  insure  fair  treatment  of  the  con- 
sumer. 

5th.  That  every  petty  burden  and  every  irritating  limitation 
placed  on  a  water  power  development  for  the  purpose  of  "protect- 
ing the  public"  is  and  must  be  paid  tor  by  the  public  Therefore, 
in  setting  up  these  things  for  the  public  good,  it  is  always  well  to 
ascertain  whether  or  not  some  of  the  many  obstructions  really  are 
for  the  public  good  and  whether  in  each  case  the  good  derived  is 
commensurate  with  the  cost.  It  is  only  when  the  benefits  equal 
or  exceed  t  he  cost  t  hat  such  things  are  wise. 


66  THE  WATER  POWER  PROBLEM 

6th.  Finally  and  most  important — water  powers  on  the  public 
lands  and  on  the  navigable  streams  will  always  be  commercially 
inferior  to  and  will  lag  behind  those  developed  on  non-navigable 
streams  and  on  private  lands  unless  the  conditions  and  stipula- 
tions governing  the  former  arc1  at  least  as  favorable  as  those  gov- 
erning the  latter. 

Henry  J.  Pierce. 

Seattle,  Wash.,  August  1,  1915. 


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APPENDIX   A 


COMPARATIVE   REVIEW   OF   THE    PROVISIONS   OF 

THE    "ADAMSON  BILL"  AND  THE 

"ADAMSON-SHIELDS  BILL" 


ADAMSON  BILL   (H.  R.   16053) 


as  passed  by  the  House  of  Representa- 
tives. 

Authority. — The  requirement  that 
consent  to  develop  water  power  must 
be  obtained,  in  each  individual  case, 
from  Congress  would  prevent  the  early 
development  of  our  water  powers. 
(Sec.   1.) 


Capacity  of  Grantee. — Any  person, 
corporation  or  association  may  become 
grantee  whether  or  not  possessing 
qualifications  recognized  by  a  State. 
(Sec.  1.) 

Tenure. — One  year  preparatory; 
three  years  for  construction;  fifty 
years  tenure.   (Sees.  9,  10  and  12.) 


Recapture. — By  giving  two  years' 
notice,  the  Government  may  purchase 
from  the  lessee  at  the  end  of  fifty 
years  "all  of  the  property  of  the  grantee 
necessary  and  useful  for  the  genera- 
tion, transmission  or  distribution  of 
power,  including  all  property  to  initial 
point  of  distribution."  This  would 
leave  on  the  grantee's  hands  all  dis- 
tribution property  dependent  for  its 
usefulness  and  existence  on  the  power 
production  property  taken  from  it  by 
the  Government.  In  the  interest  of 
both  seller  and  purchaser,  both  the 
power  production  and  distributing 
property  should,  if  purchased,  all  pass 
intact  from  the  grantee  to  the  Gov- 
ernment. 


ADAMSON-SHIELDS     BILL     (H.     R. 
16053) 

as  reported  by  the  Senate  Committee 
on  Commerce. 

Authority. — The  authority  given  to 
the  Secretary  of  War  to  grant  permits 
would  make  possible  the  early  develop- 
ment of  our  water  powers,  provided  the 
terms  of  the  grant  were  such  as  to 
enable  the  grantee  to  obtain  capital 
for  development  purposes.     (Sec.  1.) 

Capacity  of  Grantee. — A  grantee  for 
public  utility  uses  must  possess  law- 
ful qualifications  under  State  laws. 
(Sec.  1.) 


Tenure. — Two  years  preparatory; 
five  years  for  construction,  if  actually 
needed  under  diligent  procedure;  fifty 
years  tenure,  and  pending  the  decision 
of  the  Government  as  to  which  course 
it  shall  then  take  (see  below  under 
"Recapture"),  the  original  grant  shall 
continue  under  the  same  terms  and 
conditions. 

Recapture. — The  Government  may 
take  over  at  any  time  after  fifty  years 
"all  the  property  of  the  grantee,  de- 
pendent in  whole  or  in  part  for  its 
usefulness  on  the  rights  herein  granted 
which  are  necessary  and  appurtenant 
or  acquired  and  valuable  or  servicea- 
ble in  the  distribution  of  water  or  in 
the  generation,  transmission  and  dis- 
tribution of  power." 

All  of  the  above  described  property 
would  be  necessary  for  full  operation 
and  distribution  if  taken  over  by  the 
Government  for  itself  or  a  new  grantee, 
and  any  portion  of  it  left  on  the  hands 
of  the  original  grantee  would  be  value- 
less to  him  except  for  disposition  as 
junk. 


liS 


THE  WATER  POWER  PROBLEM 


ADAMSON    BILL — Continued 


ADAMSON-SHIELDS       BILL — Cont'd 


The  Bill  provides  that  if  the  Govern- 
ment takes  the  property,  it  shall  pay 
actual  cost  for  lands,  depreciated  value 
of  structures  and  nothing  for  "intangi- 
ble elements." 

The  provision  that  the  Government 
or  a  new  grantee  should  assume  exist- 
ing contracts  made  in  good  faith  is  in 
effect  the  same  as  in  the  Shields  Bill. 

At  the  end  of  the  50-year  tenure,  the 
Government  has  four  options: 

a.  May  purchase  the  property  by 
authority  of  Congress  and  operate  it. 

b.  May  renew  the  grant  to  existing 
grantee. 

c.  Grant  may  be  transferred  to  a 
new  grantee. 

d.  May  do  nothing  and  leave  the 
original  grantee  at  end  of  tenure  with 
property  on  his  hands  and  no  franchise 
or  right  to  operate  it. 

The  uncertainty  as  to  what  the  Gov- 
ernment would  do  would  prevent  capi- 
tal from  entering  the  water  power 
field.     (Sec.  10.) 


The  bill  provides  that  the  grantee 
shall  be  paid  the  fair  value  of  the  prop- 
erty, meaning  the  value  of  the  land  at 
the  time  it  is  taken  over  and  the  de- 
preciated value  of  structures,  together 
with  such  other  elements  of  value  as 
may  be  fair  and  lawful.  Contracts 
which  have  been  entered  into  in  good 
faith  and  under  reasonable  conditions 
are  to  be  assumed  by  the  Government, 
but  nothing  is  to  be  paid  for  them.  If 
the  grantee  and  the  Government  can- 
not agree  upon  prices  for  the  property, 
it  shall  be  left  to  the  district  Federal 
court  for  decision. 

By  authority  of  Congress,  the  Gov- 
ernment may  take  over  the  property 
at  any  time  after  fifty  years,  and 

a.  Renew  the  grant  to  the  original 
grantee  on  such  terms  as  may  be 
authorized    by   then   existing  law. 

b.  Grant  the  privilege  to  a  new 
grantee  on  such  terms  as  it  may  be 
able  to  secure; 

c.  Operate  it  itself.     (Sec.  6.) 


Payments  to  Government. 


Payments  to  Government. 


a.  Such  rental  charges  for  privilege 
as  Secretary  of  War  may  impose;  first 
rental  rate  to  operate  20  years  and 
then  a  readjustment,  to  be  followed  by 
subsequent  adjustments  every  ten 
years  thereafter. 

b.  For  cost  of  investigation  neces- 
sary for  approval  and  for  supervision 
of  construction. 

c.  For  benefits  derived  from  head- 
water improvements  of  every  kind. 

d.  For  lands  of  United  States  occu- 
pied, such  charges  as  may  be  fixed  by 
Secretary  of  War. 

e.  For  cost  of  removing  structures 
at  any  time  Secretary  of  War  shall  be- 
lieve navigation  has  been  injured. 
(Sees.  2  and  4.) 


a.  No  rental  charge  for  privilege. 

b.  Same  as   (b)   opposite. 

c.  Same  as   (c)   opposite. 

d.  Same  as  (d)   opposite. 

e.  No  provision  for  destroying  the 
works  of  the  grantee  without  indem- 
nity, unless  grantee  commits  an  unlaw- 
ful act. 

No  Federal  tax  upon  the  develop- 
ment of  water  power  is  imposed.  The 
taxation,  if  any,  is  left  to  the  States  to 
impose. 


Character  of  Plans. — The  Secretary 
of  War  is  directed  to  require  that  the 
plans  shall  be  "best  adapted  to  con- 
serve and  utilize  in  the  interest  of 
navigation  and  water  power  develop- 
ment, the  water  resources  of  the  re- 
gion." 


Character  of  Plans. — The  Secretary 
of  War  is  "directed"  to  accept  the 
plans  of  the  applicant  "best  qualified 
to  expedite  and  realize  the  maximum 
useful  development  of  all  the  water  re- 
sources of  the  region." 

An  additional  requirement  not  speci- 
fied in  the  Adamson  Bill  requires  that 
the  applicant  must  first  comply  with 
the  laws  of  the  State.     (Sec.  2.) 


APPENDIX  A 


69 


ADAMSON    BILL— Continued 

Locks. — The  bill  makes  it  obligatory 
upon  the  grantee  to  provide  locks  for 
navigation  facilities  whenever,  during 
the  term  of  the  grant,  the  Secretary 
shall  determine  that  such  improve- 
ments are  needed  for  navigation  pur- 
poses. 

This  holds  over  the  head  of  the 
grantee  an  expenditure,  which  may  be 
demanded  at  any  time,  equivalent  in 
some  cases  to  the  entire  cost  of  the 
power  plant.  A  lessee  is  entitled  to 
know  before  he  invests  his  money  and 
that  of  his  backers  approximately  what 
his  investment  is  going  to  be.  There 
can  be  no  surety  under  the  Adamson 
Bill  in  this  respect. 

In  case  Government  builds  locks, 
grantee  must  convey  land  needed  free 
of  cost  to  Government,  and  furnish 
free  power  to  construct  and  operate 
same.     (Sees.  2  and  3.) 


ADAMSON-SHIELDS      BILL — Cont'd 

Locks. — Under  the  Shields  Bill,  the 
Secretary  of  War  has  ample  authority 
to  secure  from  a  grantee  all  navigation 
improvements,  the  only  difference  be- 
tween this  and  the  Adamson  Bill  being 
that  the  Secretary  of  War  must  specify 
his  demands  at  the  beginning  and 
thereby  enable  the  grantee  to  have 
some  assured  financing. 

In  case  Government  builds  locks, 
same  requirements  as  in  Adamson  Bill. 
(Sec.  2.) 


Power  at  Government  Dams. — The 
right  to  the  use  of  surplus  water  in 
Government  built  and  owned  dams  may 
be  granted  for  50  years,  subject  to 
payment  of  reasonable  rentals,  for  an 
initial  period  of  twenty  years,  and  re- 
adjustments at  the  end  of  each  10-year 
period  thereafter,  preference  being 
given  to  municipal  corporations.  (Sec. 
14.) 


Power  at  Government  Dams. — The 
right  to  develop  power  at  Government 
built  or  owned  dams  may  be  granted 
by  the  Secretary  of  War  under  "such 
terms  as  may  be  deemed  by  the  Secre- 
tary of  War  for  the  best  interest  of 
the  United  States  and  reasonable  and 
fair  to  both  parties,"  and  in  awarding 
such  lease,  preference  shall  be  given 
to  the  applicant  whose  plans  are  deem- 
ed best  adapted  to  conserve  and  utilize 
in  the  public  interest  the  navigation 
and  power  resources  of  the  region. 


Public  Lands. — The  bill  provides 
that  any  public  lands  necessary  for 
power  development  in  connection  with 
improvement  of  navigation  may  be  ob- 
tained only  through  the  President 
withdrawing  them  for  that  purpose. 

The  bill  gives  no  right  to  the  exer- 
cise of  eminent  domain  for  securing 
public  lands  necessary  for  power  pur- 
poses in  connection  with  navigation 
improvement.      (Sec.  4.) 


Public  Lands. — The  bill  provides 
that  the  grantee  may  use  public  lands 
certified  by  the  Secretary  of  War  as 
being  necessary  for  navigation  pur- 
poses upon  the  withdrawal  of  the  same 
by  the  President  for  such  purposes 
and  by  payment  of  such  rentals  as 
may  be  fixed  by  the  Secretary  of  War. 

The  bill  gives  no  right  to  the  exer- 
cise of  eminent  domain  for  securing 
public  lands  necessary  for  power  pur- 
poses in  connection  with  navigation 
improvement.      (Sec.  2.) 


Assignment. — Assignment  of  grant 
can  only  be  made  with  the  consent  of 
the  Secretary  of  War.     (Sec.  8.) 


Assignment. — No  assignment  of  the 
grant  except  for  purposes  of  financing 
can  be  made  without  the  approval  of 
the  Secretary  of  War  to  "any  trans- 
feree not  having  the  qualifications  here- 


70 


THE  WATER  POWER  PROBLEM 


ADAMSON    BILL— Continued 


ADAMSON-SHIELDS      BILI Cont'd 

in  specified  for  a  grantee  hereunder,"  but 
"any  successor  or  assign  of  the  rights 
of  any  such  grantee  shall  be  subject  to 
all  the  conditions  of  the  permit  to  the 
same  extent  as  though  such  successor 
or  assign  were  the  grantee  hereunder." 
(Sec.  1.) 


Regulation. — Secretary  of  War  given 
authority  to  regulate  rates  and  service 
in  interstate  business,  but  whenever  a 
State  maintains  regulation  which  shall 
be  equitable  as  between  States,  Secre- 
tary may  forego  this.  No  authority 
given  Secretary  to  regulate  intrastate 
rates  in  cases  where  State  fails  to  do 
this.  Publicity  of  accounting  provided. 
(Sec.   11.) 


Authority  Over  Navigation  Struc- 
tures.— This  bill  may  deprive  Secre- 
tary of  War  of  exclusive  authority  over 
navigation-power  structures,  because 
in  cases  where  public  lands  are  utilized 
and  the  President  has  not  withdrawn 
said  land  from  entry  for  the  sole  pur- 
pose of  navigation,  the  Secretary  of 
the  Interior  has  joint  jurisdiction  with 
the  Secretary  of  War.     (Sec.  3.) 


Regulation.  —  Congress  reserves 
right  to  regulate  interstate  rates  and 
service.  Secretary  of  War  authorized 
to  regulate  intrastate  rates  in  States 
which  have  provided  no  regulatory 
functions.  Regulation  of  intrastate 
rates  in  States  that  have  provided 
regulatory  functions  left  to  those 
States  and  nothing  shall  interfere  with 
rights  of  States  to  so  regulate  or  tax. 
(Sec.   7.) 

Authority  Over  Navigation  Struc- 
tures.— Provides  for  only  one  author- 
ity— the  Secretary  of  War — recogniz- 
ing that  the  navigation  purpose  is 
paramount;  that  the  authority  of  said 
Secretary  over  navigation  is,  and  long 
has  been,  exclusive,  that  the  mere  in- 
cident of  public  land  occupation  can- 
not change  the  real  paramount  pur- 
pose, and  that  it  is  not  productive  of 
real  progress  to  divide  jurisdiction. 
(Sec.  2.) 


Navigation  Interests. — Dam  and  ac- 
cessory works  operated  under  control 
of  Secretary  of  War  and  navigation  is 
paramount.     (Sec.  5.) 


Navigation     Interests.  —  Same      as 
Adamson  Bill.      (Sec.  3.) 


Penal  Clause. — Provides  full  penal- 
ties for  all  violations  of  law  and  law- 
ful regulation  and  gives  Secretary  of 
War  authority  to  remove  or  destroy 
the  works  at  expense  of  grantee.  (Sec. 
7.) 


Penal  Clause. — Provides  same  full 
penalties,  except  in  the  extreme  case, 
the  court  may  decree  the  sale  of  the 
works  and  the  innocent  stockholders 
of  the  offending  company  may  secure 
such  residue  of  their  investment  as 
may  be  derived  from  said  sale.  This  is 
quite  different  from  the  Adamson  Bill, 
under  which  the  sins  of  company  offi- 
cers may  be  punished  by  totally  de- 
stroying the  investment  of  minority  as 
well  as  majority  stockholders.  (Sec.  8.) 


Repeal. — In  reserving  the  right  to 
alter,  amend  or  repeal,  the  bill  specifies 
that  in  such  case  the  lessee  shall  re- 
ceive no  compensation  for  damage  or 


Repeal. — In  reserving  the  right  to 
alter,  amend  or  repeal,  the  bill  respects 
the  property  rights  of  the  grantee  if 
injured  by  any  change  in  the  law.     If 


APPENDIX  A 


71 


ADAMSON    BILL— Continued 


ADAMSON-SHIELDS      BILL — Cont'd 


confiscation  or  rendering  operation  un- 
profitable through  changes  in  the  law. 
This  would  prevent  the  development 
of  water  powers  and  the  enlistment  of 
capital  more  effectively  than  the  rev- 
ocable feature  of  the  present  law,  for 
capital  never  would  invest  with  such 
danger  of  total  or  partial  loss  hanging 
over  it. 


the  grantee  builds  his  plant  in  good 
faith  under  a  permit  issued  under  the 
law,  he  is  entitled  to  this  protection  in 
all  equity  and  justice  and  such  a  con- 
dition is  a  necessity  to  successful 
financing. 


APPENDIX    B 


COMPARATIVE  REVIEW  OE  PUBLIC  LANDS  WATER  POWER 


H.  R.  16673  (FERRIS  BILL) 

as  passed  by  the  House  of  Representa- 
tives. 


H.  R.  16673  (FERRIS  BILL) 

as   reported   by   Senate   Committee   on 
Public   Lands. 


1.  The  Lease  —  How  Made. — The 
Secretary  of  the  Interior  is  "author- 
ized and  empowered"  to  lease  power 
site  lands — i.  e.t  he  may  use  his  dis- 
cretion both  as  to  the  granting  or  the 
refusing  of  the  lease  to  an  applicant 
and  in  contested  cases  as  to  the  selec- 
tion of  the  favored  applicant.    (Sec.  1.) 


1.  The  Lease  —  How  Made. — The 
Secretary  of  the  Interior  is  "directed" 
to  lease  to  any  properly  qualified  per- 
son who  shall  comply  with  the  law 
passed  by  Congress,  and  who  is  author- 
ized bv  the  btate  to  use  the  water. 
(Sec.  1.) 


2.  Specific  Terms. — Leases  grant- 
ed "under  general  regulations  to  be 
fixed"  by  the  Secretary,  and  "under 
such  terms  and  conditions  as  he  may 
prescribe,  not  inconsistent  with  the 
terms  of  the  Act."  That  is,  the  Secre- 
tary is  given  absolute  discretion  as  to 
specific  terms  not  covered  by  the  Act 
and  mav  discriminate  between  parties. 
(See.  1.) 

3.  Public  Lands  Exempted  From 
Terms  of  Bill. — National  parks  and 
military  reservations;  in  the  case  of 
other  reservations  no  lease  shall  be 
given  unless  the  chief  officer  of  the  De- 
partment in  charge  shall  certify  that 
the  same  will  not  interfere  with  the 
purposes  of  the  reservation.   (Sec.  1.) 

4.  Qualifications  of  Lessee. — Citi- 
zens of  the  United  States  or  any  asso- 
ciation of  such  or  any  corporation  duly 
organized  under  State  or  Federal  laws. 
(Sec.  1.) 


2.  Specific  Terms. — Leases  grant- 
ed "under  general  regulations  to  be 
fixed"  by  the  Secretary  "not  inconsis- 
tent with  the  terms  of  the  Act."  That 
is,  the  Secretary  must  treat  all  appli- 
cants alike.     (Sec.  1. ) 


3.  Public  Lands  Exempted  From 
Terms  of  Bill. — Same  as  House  Bill. 
(Sec.  1.) 


4.     Qualifications  of  Lessee. 
as  in  House  Bill.     (Sec.  1.) 


-Same 


5.  Period  of  Lease. — Discretionary  5.  Period  of  Lease. — Fifty  years, 
with  Secretary  of  the  Interior  but  not  unless  the  applicant  and  the  Sec- 
longer  than  50  years,  and  at  the  end  retary  agree  on  a  shorter  period 
thereof   the   Government   may    do    one  as  the  applicant  may  elect,  and  at  the 


APPENDIX    B 


MEASURES    PROPOSED    OR    CONSIDERED    IN  63d  CONGRESS 


S.  6712   (JONES  BILL) 

which    was    not    reported    by    Senate 
Committee  on  Public  Lands. 


S.  7171   (WORKS  BILL) 

which    was    not    reported    by    Senate 
Committee  on  Public  Lands. 


1.  The  Grant  —  How  Made. — The 
bill  makes  affirmative  grant  to  quali- 
fied applicants  who  shall  comply  with 
its  terms  and  submit  proof  of  their 
right  to  use  the  water.     (Sec.  1.) 


1.  The  Grant  —  How  Made. — Af- 
firmative grant  to  qualified  applicants 
who  shall  submit  proof  of  right  to  use 
the  water  under  State  laws.     (Sec.  1.) 


2.      Specific    Terms. — Set    forth     in 
the  bill  or  determined  by  State  laws. 


2.      Specific    Terms. — Set    forth     in 
the  bill  or  determined  by  State  laws. 


3.     Public    Lands    Exempted    From 
Terms  of  Bill. — None. 


3.  Public  Lands  Exempted  From 
Terms  of  Bill. — None;  except  in  Na- 
tional forests,  National  monuments  and 
Indian  reservations,  the  location  shall 
be  such  as  not  to  interfere  with  the 
purposes  of  said  reservations.  (Sec.  1.) 


4.  Qualifications  of  Grantee. — 
Any  State  or  municipal  corporation  or 
any  mutual  or  public  service  corpora- 
tion or  person  authorized  by  the  State 
to  conduct  power  business,  except  in 
developments  of  1,000  h.  p.  or  less,  in 
which  case  no  special  qualifications  are 
necessary.     (Sees.  1  and  13.) 

5.  Period  of  Grant. — Fifty  years, 
after  which  the  Government  may  take 
over  the  property  at  any  time,  either 
for  itself  or  for  conveyance  to  a  third 

(8) 


4.     Qualifications     of     Grantee. — 
Same  as  Jones  Bill.     (Sec.  1.) 


5.  Period  of  Grant.-  Runs  coter- 
minous with  right  of  grantee  or  his 
successors  to  use  the  water  under  State 
authority,  and  if  water  rights  are  lost 


THE  WATER   POWER    PROBLEM 


H.    R.    16673 — Continued 

of  four  things:  (a)  take  over  the  prop- 
erty; (b)  lease  to  the  original  lessee; 
(c)  lease  to  a  new  party  who  may  be 
favored  by  the  administrative  officer, 
notwithstanding  the  fact  that  the  orig- 
inal lessee  may  have  conducted  him- 
self lawfully  and  honorably;  (d)  may 
do  nothing  and  thereby  leave  the  prop- 
erty without  title.  There  is  absolutely 
no  guaranty  that  the  Government  will 
make  any  disposition  of  the  lease  at 
expiration.  This  means  an  impaired 
and  uncertain  investment  from  the 
start.     (Sees.  1,  5  and  6.) 


H.    R.    16673    (Senate) — Continued 

end  thereof  the  Government  may  do 
one  of  four  things:  (a)  take  over  the 
property;  (b)  lease  to  the  original 
lessee  who  has  preference  right  over 
any  other  party  upon  such  terms  and 
conditions  as  then  existing  law  shall 
authorize;  (c)  lease  to  a  new  party  if 
original  lessee  fails  to  renew;  (d)  may 
do  nothing,  in  which  event  the  lease 
may  continue  under  terms  as  may  then 
be  in  force.     (Sees.  1,  5  and  6.) 


6.  Construction  and  Operation.— 
Provides  for  diligent,  orderly  and  rea- 
sonable development  and  continuous 
operation  subject  to  market  conditions. 
(Sec.  2.) 


6.     Construction    and    Operation. — 
Same  as  House  Bill. 


7.  Leases  to  States  and  Munici- 
palities.— The  Secretary  may  give 
preference  to  applications  for  leases 
by  States  and  municipalities.   (Sec.  1.) 


7.     Leases    to    States    and    Munici- 
palities.— Same  as  House  Bill.  (Sec.  1.) 


8.  Sales  to  One  Consumer. — The 
Bill  forbids  a  lessee  to  contract  for  the 
delivery  of  more  than  50  per  cent  of 
his  output  to  one  person  irrespective 
of  whether  such  a  limitation  would 
prevent  financing,  prohibit  large  man- 
ufacturing development,  or  allow  a 
portion  of  the  product  of  a  developed 
site  to  go  to  waste.     (Sec.  2.) 

9.  Regulation. — Rates  and  service 
and  the  issuance  of  securities  are  to 
be  regulated  by  the  Secretary  of  the 
Interior  in  interstate  cases;  also  in 
intrastate  cases  where  States  have  not 
provided  for  regulatory  procedure. 
(Sees.  3  and  9.) 


8.  Sales  to  One  Consumer. — The 
Bill  makes  no  fanciful  and  artificial 
limitations  on  the  sale  of  energy  and 
puts  no  shackles  on  commendable  in- 
dustrial enterprise,  leaving  the  deter- 
mination of  offenses  against  the  law 
of  the  land  to  the  courts,  under  pro- 
cedure prescribed  by  the  sovereign. 


9.  Regulation.  —  Interstate  rates 
and  service  and  the  issuance  of  securi- 
ties are  to  be  regulated  by  the  Inter- 
state Commerce  Commission.  Intra- 
state rates,  service  and  security  issues 
in  those  States  which  have  provided 
no  regulatory  procedure  are  to  be  reg- 
ulated by  the  Secretary  of  the  Interior. 
(Sees.  3  and  9.) 


APPENDIX  B 


75 


S.   6712 — Continued 

party.  In  the  event  that  the  United 
States  does  nothing,  the  grant  contin- 
ues as  originally  given.  This  preserves 
title  to  the  property  and  prevents  de- 
pression of  investment.     (Sec.  2.) 


S.  7171 — Continued 

or  forfeited  so  that  the  water  cannot 
be  used  in  connection  with  the  land, 
said  land  reverts  to  the  United  States 
or  to  such  successor  in  interest  as  may 
possess  rights  to  use  the  water.  If  ter- 
minated by  State,  the  land  reverts  to 
the  United  States.     (Sec.  5.) 


G.  Construction  and  Operation. — 
The  grantee  is  given  two  years  to  com- 
mence construction  and  five  years  fur- 
ther to  complete  if  so  much  time  is 
necessary  under  continuous  and  dili- 
gent procedure.  Extensions  may  be 
granted  by  President  when,  in  his 
judgment,  the  public  interest  will  be 
promoted  thereby.  The  grantee  must 
operate  to  the  extent  deemed  by  the 
Secretary  necessary  to  supply  ade- 
quately the  needs  of  the  available  mar- 
ket.     (Sec.  6.) 


6.  Construction  and  Operation. — 
The  grantee  is  given  one  year  to  com- 
mence construction  and  five  years  to 
complete,  if  so  much  time  is  necessary 
under  continuous  and  diligent  pro- 
cedure. The  grantee  is  required  to 
operate  according  to  the  public  demand 
for  power.     (Sec.  5.) 


7.  Grants  to  States  and  Munici- 
palities.—The  Bill  commands  that  the 
grant  approved  by  the  Secretary  shall 
be  the  one  which  "will  promote  the 
highest  and  greatest  practicable  use  of 
the  water  resources  involved."  (Sec.  2.) 

8.  Sales  to  One  Consumer. — See 
Ferris  Bill   (Senate)   opposite. 


7.  Grants  to  States  and  Munici- 
palities.— The  matter  of  preferential 
grants  is  settled  by  the  State.  The 
grant  is  made  to  the  applicant  holding 
water  rights  from  the  State.     (Sec.  2.) 


8.     Sales    to    One    Consumer. 
Ferris  Bill   (Senate)  opposite. 


-See 


9.  Regulation. — The  Bill  does  not 
provide  for  grants  in  States  which  have 
not  provided  for  regulation  of  public 
utilities.  Rates  and  service  in  other 
States  are  to  be  regulated  by  such 
States.  The  United  States  reserves 
the  right  to  regulate  interstate  rates 
and  service.      (Sees.  1  and  7.) 


9.  Regulation.  —  Intrastate  rates 
and  service  are  placed  under  State 
authority.  Interstate  rates  and  service 
are  placed  under  Interstate  Commerce 
Commission.     (Sec.  7.) 


THE  WATER  POWER  PROBLEM 


H.    R.    16673 — Continued 

10.  Combin  vnoNs  ix  Restraint  of 
Trade. — The  Bill  forbids  all  acts  of  the 
lessee  which  accomplish  restraint  of 
trade.     (Sec.  3.) 

11.  Lawful  Combinations. — A  law- 
ful combination  may  be  prevented  by 
the  Secretary  of  the  Interior  if  in  any 
particular  case  it  does  not  please  him. 
(Sec.  3.) 


H.    R.    16673    (Senate) Continued 

10.     Combinations   in   Restraint  of 
Trade. — Same  as  House  Bill.     (Sec.  3.) 


11.     Lawful 
as  House  Bill. 


Combinations.- 
(Sec.   3.) 


-Same 


12.  Sales  to  Distributing  Compa- 
nies.— The  Bill  forbids,  except  upon 
consent  of  an  administrative  officer, 
the  sale  of  power  to  a  distributing 
company.  It  is  immaterial,  according 
to  this  bill,  whether  the  lessee,  by  such 
sale,  does  or  does  not  restrain  trade, 
does  or  does  not  benefit  the  public,  or 
whether  the  producer  or  the  distribu- 
tor is  or  is  not  regulated  by  a  sovereign 
as  to  rates,  service,  etc.  The  decision 
of  the  Secretary,  wise  or  unwise,  is 
final.     (Sec.  4.) 

13.  Assignment  of  Lease.  —  No 
Lease  assignable  or  transferable  with- 
out consent  of  Secretary  of  the  Inter- 
ior (Sec.  4).  This  provision  accom- 
plishes nothing  except  the  further  em- 
barrassment of  a  company  that  may  be 
in  financial  straits.  Neither  the  Gov- 
ernment nor  the  people  care  who  holds 
a  lease  so  long  as  the  holder  is  under 
control. 


12.  Sales  to  Distributing  Compa- 
nies.— The  Bill  makes  no  mention  of 
sales  to  distributing  companies,  places 
no  obstacle  in  the  path  of  proper  devel- 
opment and  leaves  to  the  judiciary  the 
duty  of  determining  whether  any  act 
of  the  producer  or  distributor  is  in  vio- 
lation of  law  or  prejudicial  to  the  pub- 
lic interest.  The  Bill  assumes,  by  in- 
ference, that  both  producer  and  dis- 
tributor are  subject  to  regulation  in 
the  public  interest  and  that  an  offense 
is  subject  to  punishment  by  sovereign. 

13.  Assignment  of  Lease. — Leases 
may  be  assigned  or  transferred,  but 
the  successor  is  bound  by  all  the  obli- 
gations to  Government  of  the  original 
lessee. 


14.  Liens  or  Mortgages. — No  lien 
can  be  created  on  any  water  power 
property  developed  under  a  lease, 
whether  the  land  so  leased  constitutes 
all  or  only  a  minute  part  of  the  devel- 
opment, without  the  approval  of  the 
Secretary  of  the  Interior.     (Sec.  4.) 

15.  How  the  Property  May  Be 
Taken  Over  by  the  United  States. — 
At  any  time  after  three  years  immedi- 
ately prior  to  lease  expiration,  United 
States  may  give  three  years'  notice 
and  take  over  all  the  property  acquired 
by  the  lessee,  dependent  in  whole  or 
in  part  for  its  usefulness  on  the  con- 
tinuance of  the  lease.     (Sec.  5.) 


14.  Liens  or  Mortgages. — No  lien 
can  be  created  on  the  land  leased  with- 
out the  approval  of  the  Interstate  Com- 
merce Commission.     (Sec.  4.) 


15.  How  the  Property  May  Be 
Taken  Over  by  the  United  States.— 
At  any  time  after  three  years  immedi- 
ately prior  to  lease  expiration.  United 
States  may  give  three  years'  notice 
and  take  over  all  the  property  depen- 
dent in  whole  or  in  part  for  its  useful- 
ness on  continuance  of  the  lease,  or 
upon  mutual  agreement  with   the  les- 


APPENDIX  B 


77 


S.   6712 — Continued 

10.  Combinations  in  Restraint  of 
Trade. — The  Bill  forbids  all  acts  of  the 
grantee  which  result  in  restraint  of 
trade.     (Sec.  3.) 

11.  Lawful  Combinations.  —  The 
Bill  makes  no  provision  for  giving  the 
Secretary  authority  to  permit  combina- 
tions of  plants  or  lines,  because  as 
the  bill  defines  the  acts  and  practices 
which  constitute  restraint  of  trade,  the 
violation  of  the  law  is  left  to  deter- 
mination of  the  local  body  charged  with 
regulation,  or  to  existing  Federal  law. 

12.  Sales  to  Distributing  Compa- 
nies.— Same  as  Ferris  Bill    (Senate). 


S.  7171 — Continued 

10.  Combinations  in  Restraint  of 
Trade. — Covered  by  existing  Federal 
and  State  laws. 


11.     Lawful      Combinations. — Same 
as  Jones  Bill. 


12.     Sales    to    Distributing    Compa- 
nies.— Same  as  Ferris  Bill    (Senate). 


13.     Assignment  of  Lease. — Left  to 
State  regulation.      (Sec.  7.) 


1.3.  Assignment  of  Lease. — The  bill 
provides  that  assignment  or  transfer 
of  water  rights  under  State  laws  car- 
ries with  it  the  lands  granted  by  the 
United  States  for  the  use  of  the  water. 
(Sec.  5.) 


14.     Liens  and  Mortgages. — Left  to 
State  regulation.      (Sec.  7.) 


14.     Liens   and  Mortgages. 
State  regulation.      (Sec.   10.) 


-Left  to 


L5.     How     the     Property     May     Be 
Taker  Over  by  the  United  States. — 

Upon  expiration  of  50-year  period  or 
any  time  thereafter,  Congress  may  pro- 
vide for  termination  of  grant  and  dis- 
position of  all  the  property  dependent 
for  its  success  on  the  rights  granted. 
(Sec.  5.) 


15.  How  the  Property  May  Be 
Taken  Over  by  the  United  States. — 
Whenever  the  right  to  use  the  waters 
for  the  purposes  of  the  grant  shall  be 
forfeited  or  otherwise  terminated  by 
the  State  wherein  the  land  is  situated, 
or  by  flnal  adjudication  in  the  courts, 
the  land  reverts  to  the  United  States. 
i  Sec.  5. » 


78 


THE  WATER  POWER  PROBLEM 


H.    R.    16673 — Continued 


16.  Compensation  foe  Property 
Taken  Over. — The  Bill  provides  for 
payment  on  taking  over,  at  expiration 
of  lease,  lands,  water  rights,  etc.,  at 
actual  cost,  and  of  improvements  at 
fair  value,  or,  in  other  words,  depreci- 
ated value,  exclusive  of  intangibles. 
The  lessee  is  thereby  denied  the  bene- 
fit of  any  appreciation  of  property,  but 
is  penalized  for  full  depreciation. 
(Sec.  5.) 

17.  Elements  of  Value  Excluded 
From  Compensation. — The  Bill  ex- 
cludes: (a)  the  value  of  the  franchise; 
(&)  good  will;  (c)  profits  to  be  earned 
on  pending  contracts;  (d)  all  other  in- 
tangible elements.     (Sec.  5.) 

All  the  above  are  fair  to  the  investor 
except  (d)  (Sec.  5).  Intangible  ele- 
ments cover  many  things  necessary  to 
the  business  for  which  legitimate  cash 
expenditure  is  required.  To  deprive 
the  investor  of  these  would  be  nothing 
but  confiscation  of  a  goodly  portion  of 
the  actual  value  of  the  property. 


18.  Contracts  for  the  Sale  of 
Power  Beyond  Lease  Period. — Con- 
tracts for  the  sale  or  delivery  of  power 
for  periods  not  exceeding  20  years  be- 
yond the  life  of  the  lease  may  be  made 
if,  in  the  judgment  of  the  Secretary  of 
the  Interior,  public  interest  justifies. 
No  recognition  is  given  to  the  fact  that 
the  States  may  possess  some  sover- 
eignty over  contracts  executed  within 
them.  Furthermore,  if  at  the  end  of 
the  thirtieth  or  fortieth  year  of  the 
lease,  an  industrial  condition  should 
arise  which  required  a  50-year  con- 
tract, or  if  even  at  the  beginning  of  the 
lease  a  perpetual  contract  should  be 
required  for  irrigation,  the  lessee 
would  be  powerless.     (Sec.  7.) 

19.  Federal  Tax. — For  the  occu- 
pancy and  use  of  Government  lands, 
the  Secretary  of  the  Interior  may  use 
his  discretion  in  raising  revenue 
(which  sovereign  authority  the  Consti- 
tution gives  only  to  Congress)   and  may 


H.    R.    16673    (Senate) — Continued 

see,  the  United  States  may  take  a 
severable  and  complete  unit  of  any 
such  power  system.      (Sec.  5.) 

16.  Compensation  for  Property 
Taken  Over. — The  Bill  provides  for 
payment  of  fair  value  of  property, 
which  includes  reasonable  appreciation 
of  property  as  well  as  depreciation. 
(Sec.  5.) 


17.  Elements  of  Value  Excluded 
From  Compensation. — The  Bill  ex- 
cludes: (a)  rights  of  way  or  other 
property  of  the  United  States  under 
lease;  (b)  value  of  the  franchise;  (c) 
good  will;  (d)  going  concern;  (e)  fu- 
ture profits  from  pending  contracts  or 
prospective  revenues,  profits  or  divi- 
dends. (Sec.  5.)  "Going  concern"  has 
been  declared  legitimate  by  the  U.  S. 
Supreme  Court.  It  represents  legiti- 
mate cash  paid  by  the  business,  and  to 
deprive  the  investor  means  non-pay- 
ment for  a  portion  of  actual  value  of 
property. 

18.  Contracts  for  the  Sale  of 
Power  Beyond  the  Lease  Period. — 
May  extend  twenty-five  years  beyond 
lease  period  if  approved  by  State  pub- 
lic service  authorities  and  Secretary 
of  Interior.     (Sec.  7.) 


19.     Federal    Tax.- 
Bill   (House). 


-Same   as   Ferris 


APPENDIX  B 


79 


S.   6712 — Continued 


S.  7171 — Continued 


16.  Compensation  for  Property 
Taken  Over. — See  Ferris  Bill  (Senate) 
opposite.     (Sec.  5.) 


16.  Compensation  for  Property 
Taken  Over. — Settlement  to  be  in  ac- 
cordance with  State  laws. 


17.  Elements  of  Value  Excluded 
From  Compensation. — The  Bill  ex- 
cludes as  an  element  of  value  the  use 
of  or  the  right  to  use  the  lands  ac- 
quired under  the  terms  of  the  Act. 
(Sec.  3.)  For  the  other  elements,  Con- 
gress would  provide  in  each  case.  (Sec. 
5.) 


17.  Elements  of  Value  Excluded 
From  Compensation. — The  Bill  allows 
no  compensation  or  value  in  connec- 
tion with  the  rights  obtained  or  used 
under  the  Act.     (Sec.  4.) 


18.  Contracts  for  the  Sale  of 
Power  Beyond  Lease  Period. — Con- 
tracts for  the  sale  or  delivery  of  power 
may  be  made  for  periods  extending  be- 
yond the  period  of  lease  when  the  pub- 
lic interest  requires  (not  when  requir- 
ed in  the  judgment  of  the  Secretary) 
and  on  the  approval  of  the  appropriate 
State  authority.  (Sec.  4.) 


18.  Contracts  for  the  Sale  of 
Power  Beyond  Lease  Period. — Regu- 
lated by  terms  of  water  rights  in 
States. 


19.  Land  Rentals.  —  The  United 
States  is  to  be  paid  5  per  cent  interest 
on  the  appraised  fair  value  of  the  pub- 
lic land  occupied. 


19.  Land  Rentals. — Provides  that 
fair  value  of  lands  including  enhance- 
ment by  reason  of  special  adaptability 
for  power  purposes,  shall  be  determin- 
ed. Provision  for  payment  of  said 
value  evidently  omitted  by  author 
through  inadvertence. 


80 


THE  WATER  POWER  PROBLEM 


H.    R.    16673 — Continued 

base  Federal  taxes  on  the  amount  of 
power  developed  by  the  State's  water. 
(Sec.  8.) 

20.  Accounts  \m>  Reports. — Secre- 
tary of  the  Interior  authorized  to  ex- 
amine books  and  accounts  and  require 
statements  and  reports,  notwithstand- 
ing the  fact  that  a  lessee  may  be  oper- 
ating entirely  within  one  State  and 
thereby   is  subject  to  State  laws. 

21.  States"  Control  of  Water. — 
States'  control  over  use  of  water  af- 
firmed notwithstanding  the  fact  that 
many  sections  of  the  bill  deprive  the 
States  of  such  control.     (Sec.  14.) 


H.    R.    16673    (Senate) — Continued 


20.     Accounts    and    Reports. 
as  House  Bill. 


-Same 


21.     States'    Control    of    Water. — 
Same  as  House  Bill. 


APPENDIX  B 


81 


S.   6712 — Continued 


S.  7171 — Continued 


20.  Accounts  and  Reports. — The 
rendering  of  accounts  and  reports  is 
left  to  the  States,  except  that  the 
United  States  reserves  the  right  to  do 
this  in  case  of  interstate  service.  (Sec. 
7.) 


20.     Accounts  and  Reports. — All  un- 
der State  control. 


21.  States'  Control  of  Water. — 
Deference  is  paid  directly  to  States' 
authority  (Sec.  2),  and  nothing  in  the 
bill  seeks  to  violate  or  abridge  that 
authority. 


21.  States'  Control  of  Water. — 
The  whole  bill  is  based  on  the  assump- 
tion that  the  States'  control  of  water 
is  the  main  consideration. 


APPENDIX   C 


Calendar  No.  740 

3d  Session. 


03  CONGRESS  H.  R.  16053 


[Report  No.  846.] 

IN  THE  SENATE  OF  THE  UNITED  STATES. 

August  5, 1914. 
Read  twice  and  referred  to  the  Committee  on  Commerce. 

December  19,  1914. 
Reported  by  Mr.  Shields,  with  an  amendment. 

[Strike  out  all  after  the  enacting  clause  and  insert  the  part  printed  in  italic] 


AN  ACT 

To  amend  an  Act  entitled  "An  Act  to  regulate  the  construction  of 
dams  across  navigable  waters,"  approved  June  twenty-first, 
nineteen  hundred  and  six,  as  amended  by  the  Act  approved 
June  twenty-third,  nineteen  hundred  and  ten. 

1  Be  it  enacted  by  the  Senate  and  House  of  Kepresenta- 

2  tires  of  the  United  States  of  America  in  Congress  assembled, 

3  That  the  Act  entitled  "An  Act  to  regulate  the  construction 

4  of  dams- across  navigable- waters,"  approved- June  twenty  - 

5  third,  nineteen  hundred  and  tenr4>er^nd  the  same  is  hereby, 
(J  amended  to  read  as  follows: 

7  "Section  1.  That   when  consent  er  authority  has  been 

8  or  may  hereafter  be  granted  by  Congress,  either  direet4y-er 

9  indirectly  through  any  duly  authorized  official  or  officials-of 


•i 


1  t lit'  United  Slates,  to  any  persons  to  construct  and  maintain 

2  a  dam  for  water  power  or  other  purpose  across  or  in  any  of 

3  the  navigable  waters  of  the  United  States,  such  dam  shall 

4  not  be  built  or  commenced  until  the  plans  and  specifications 

5  for  such  dam  and  all  accessory  works,  together  with  such 
G  drawings  of  the  proposed  construction  and  such  map  of  the 

7  proposed  location  as  may  be  required  for  a  full  understanding 

8  of  the  subject,  have  been  submitted  to  the  Secretary  of  War 

9  and  the  Thief  of  Engineers  for  their  approval,  nor  until  they 

10  shall  have  approved  such  plans  and  specifications  and  the 

11  location  of  such  dam  and  accessory  works;  and  after  such 

12  approval  it  shall  noUbe  lawful  to  deviate  from  such  plans 

13  or  specifications   either  before   or  after  completion   of  4,h% 

14  structure  sinless  the  modification  of  such  plans-or  specifics 

15  tions  has   previously- Jbeeu  -submitted   to  and  received   the 

16  approval  of  the  Secretary  of  War  and  the  Chief  of  Engineers, 

17  Such  plans,  specifications,  and  drawings  shall  be  submitted 

18  within  two  years  after  the  date  of  the  approval  of  the  Act 

19  authorizing  the  construction. 

20  "Sec.  2.    That  as  a  part  of  such  approval  such  condi- 

21  tions  ami  stipulations  may  be  imposed  as  the  Secretary  of 

22  War  and  the  rhief-of-  Engineers  may  deem  necessary  4o^pre- 

23  tect  the  present  a nd- future—  interests  o£4he  United-States? 

24  which  may-4Bc4ude  the  condition  that  the  persons  construct- 
9K  itio-  af  innin+m'niTia-  «rwh  flnm  ska4j  construct^- maintain,  and 


ing-or— maintaining  such  da 


1  operate   iu   connection   therewith,    without  ^spense — to— the 

2  United  States,  a  lock  or  locks,  booms,  sluices,  or  any-other 

3  st  raetar-e-oiM^tyuctureR  whi  eh  the  See  re t  a  ry  of  War  and  the 

4  Chie£of  Engineers  or  Congress  at-any-4iffle-may  deem  neces- 

5  sa r y  in  the  interests  of  navigation,  in-ac ce*rdance  Avith  such 
G  plans  as  they  may  approve^and  also  that- whenever— Con- 

7  gress  shall  deem  such  facilities  necessary,  the~persons  owning 

8  such  dam  shall  convey  to  the  United  States,  free  of  cost,  title 

9  to  such  land  as  may  be^*equired  for  such  constructions  and 

10  approaches,  ^nd  shall  grant  to  the  United  States  free  water 

11  power  or  power  generated  trom   water  power  for^  building 

12  and  operating  such  constructions,  at  the  ^liseretkm— of-  the 


13 


and  Chief  of  Engineers,  may- 


tired 


14  fo  maintaln-and-operatc  such  lock  without  expense  to  the 

15  United  States.     The^Secretary   of  Wannay- provide,  as  a 

16  condition  of  such  approval,  for  the  payment  to  Ihe  United 

1 7  States  ^)f  reasonable  amiuaU^rharges-for   the  bei 

18  accrue  to  the  grantee  by  the  authoril 
1!)  and  at  the  end  of  twenty  years  and  every  ten  years  thereafter 

20  the  Secretary  of  War  mtrrreadjust  the  annual  charges  as  may 

21  then  be  just  and  reasonable. 

22  "Skc.  3.  That  as  a  part  of  said  approval  the  Secretary 

23  of   War  and   the  Chief  of  Engineers  shall   require   that   the 

24  plans,  specifications,  ;ind  location  for  any  dam  shall  be  such 

25  as  shall  be  best   adapted   to  a   comprehensive  plan   for  the 


1  improvement  of  the  waterway  4n  question  for  the  uses  of 

2  navigation  and  for  the  full  development- of  its  water  power 

3  and  for  other  beneticial  public-purposes,  4in4- best  adapted  to 

4  conserve  and  utilize,  in  the  interest 

5  powei*  development,  the  water  resoi 

6  "Sec.  4.  That  as  a  part --el 

7  tions  such  approval  shall  provide — 

8  "  (-a) — For-^eiinbursement  to   the   United   States   of  all 

9  expenses  incurred  by  the  United  States  with  reference 

10  project,  including  the  cost  of  any  investigf 

11  the  approval  of  the  plans  as  heretofore  provided,  and  for  such 

12  supervision   of—construction    as    may    be    necessary    in — the 

13  interest  of  the^United  States. 

14  " (b)   For  the"payment  to  the  United  States  of  reason- 

15  airte-rfrargetr^for  ^the   benefits   which    may   accrue   to   such 
1  * >  pro j eet  tbrougtrtlre fonstruction,  operation,  and  maintenance, 

17  in  and  about  such  streams,  by^he  United  States  of  headwater 

18  improvements   of   every    kind,    nature,    and    description^-  in- 

ersheds  or  land 

20  owned,   located,   or   reserved   by   the   United   States   at   the 

21  headwaters  of  any  navigable  stream   for  the  development, 

22  improvement,  or  preservation^^  navigation  in  such  stream 

23  in  which  such  dam  mav  be-loeatcd. — Such  charges  shall  be 

24  fixed  from  time  to  time  by-thc  Secretary  of  War  and  Chief 

25  of — Engineers, — based — upon — a — reasonable — compensation 


19     eluding   storage   reservoirs   or   forestec 


1     equitably  apportioned  among  the  grantee  and  others  similarly 

m  receiving  benefits  by  reason  of 
r  water  power  structures  artificially 


4  caused  by  sue] 

5  all  such  benefici 

6  not  to  exceed  in  an^ 


ly  such  headwater  improvement 
year  an  amount  equal  to  five  per 

7  centum  of  the  total  investment  cost,  in  addition^  the  ncccs- 

8  sary  annual   expense   of   the   operation   of   such   headwater 

9  improvement. 

10  " (c)  That  in  the  construction,  maintenance,  and  opera- 

11  tion  of  any  project  under  this  Act  for  the  promotion  of  navr- 

12  gaticmy  the  grantee  may,  with  the  consent  of  the  Secretary  of 

13  War,  use  and  occupy,  when  necessary  for  carrying^tnrtrtfae 

14  project,  lands  acquired  by  the  United  States  through  pur- 

15  chase  or  condemnation  and  any  part  of  the  ^pubrre4ands  with- 

16  drawn  by  the  President  from  entry  or 


17  sole  purpose  of  promoting  navigation,  which  tl 

18  may  do,  as  provided  in  the  Act  entitled,  'An  Act  to^authorize 

19  the  President  of  the  United  States  to  make  withdrawal  of 

20  public  lands  in  certain  cases/  approved  June  twenty-fifth, 

21  nineteen  hundred  and  ten.     For  any  of  such  lands  so  used 

22  the  grantee  shall  pay  to  the  United  States  such  charges  as 

23  may  be  fixed  by  the  Seeretaryrji^War. 

24  "(d)   For  the  payment  or  securing  the  payment  to  the 

25  United   States  of  such~ sums  and   in   such   manner  as^the 


1  Secretary  of  War  and   the  Chief  of   Engineers   may  deem 

2  reasonable  arid  just  substantially  to  restore  conditions  upon 

3  such  stream  as  to  navigability,  "existing :  at  the  time  of  such 
1  approval,  whenever  the~1SeeTetary"of  War  and  the  Chief  of 

5  Engineers  shall  determine  that  navigation  has  been  injured 

6  by  reason  of  the  construction,  maintenance,  and  operation  of 

7  such  dam  and  its  accessorv  works: 

8  uSt:c.Hj.    That    the    right    is    hereby   reserved  ^to   the 

9  United  States-to  construct,  maintain,  and  operate, ^m  cotf 

10  nection  with  any  daTn^built^in  accordance  witii  the  provisions 

11  of  this  Act,  a  suitable  lock  or  locks,  booms,  sluices,  or  any 

12  other  structures  for  navigation  purposes,  and  theroperation  ~6f 

13  navigation  facilitres^vhich  shall  be  constructecTas  a  part  of  or 
1 1  in  connection  with  any  dam  built^under  the  provisions  of 

15  this  Act,  whether   nt — the — expense  of  ~sxrch  grantee  or~of 

16  the  United  ^States,   shall  aL  all   Limes  be~srrbject    to    suclr 

17  reasonable  rules  and:  regulations  in  the  interest  of  navigation; 

18  including   the   control   of  the  level   of  the^pbol   caused   by 

19  any  such  dam,  as  shall  be  made  by  the  Secretary  of  War 

20  and  Chief  of  Engineers,  and  in  the  use  and  operation  of  such 

21  navigation  faTilitie^~tllerinterests  of~iiavigation  shall  be  para7 

22  mount  to  the  uses  of  such  dam  by  such  grantee  for  power 

23  purposes:  Such  rules  and"  regulations  liiay^  include  the 
21  maintenance  and  operation  by  such  grantee,  at  its  own 
25  expense,  of  such  lights~aTid  other  signals  as  may  be  directed 


1  by  the  Secretary  of  War  and  Chief  of  Engineers  and  such 

2  fishways  as  shall  be  prescribed  by  the   Secretary  of  Com- 

3  mcrcc,  and  for  failure  to  comply  with  any  such  rule  or  regula- 

4  tion  such  grantee  shall  be  deemed  guilty  of  a  misdemeanor, 

5  and  upon  conviction  thereof  shall  be  subject  to  a  fine  of  not 

6  less  than  $500  for  each  month's  default,  in  addition  to  other 

7  penalties  herein  prescribed  or  provided  by  law. 

8  "Sec.   C. — That  the  persons   constructing,   maintaining, 

9  or  operating  any  dam  or  appurtenant  or  accessory  works,  in 

10  accordance  with  the  provisions  of  this  Act,  shall  be  liable 

11  for  any  damage  that  may  be  inflicted  thereby  upon  private 

12  property,  either  by  overflow  or  otherwise. 

13  "Sec.  7.  That  any  grantee  who  shall  fail  or  refuse  to 
11  comply  with  the  lawful  order  of  the  Secretary  of  War,  made 

15  4b  accordance  with-the  provisions  of  this  Act,  shall  be  deemed 

16  guilty  of  a  misdemeanor,  and  on  conviction  thereof  shall  bo 

1 7  punished  by  a  fine  not  exceeding  $1,000,  and  every  month 

18  -such  grantee  shall  renrairrin  default  shall  be  deemed  a  new 

1 9  uffense   and — sirb jert  ^u ch    grantee — to   additional    penalties 

20  -therefor;  nud   in    addition — to   said   penalties   the   Attorney 

21  Genera]  may;  on  request  of  the  Kecretarrof— War,  institute 

22  proper  proceedings  in  the  district  court  of  the  I Tnttedr States 

23  lii  the  district  in  which  such  structure  or  any  of  its  accessory 

24  works  may,   in   whole  or  in  part,  exist,  for  the  purpose— of 

25  having  such  violation  stopped  by  injunction,  uiandj 

(9) 


1  other  process;  and  anv  such  district  court  shall  have  iu-r-is- 

2  diction  over  all  such  proceedings  and  shall  have  the  power  to 

3  make  and  enforce  all-writs,  orders,  and  decrees  necessary  to 
1  compel  the  compliance  with  the  requirements  of  this  Act  and 
5  the  lawful  orders  of  the  Secretary  of  War  and  the  perform- 
(>  ance  of  any  condition  or  stipulation  imposed  under  the  pro- 

7  visions  of  this  Act;  and  if  the  unlawful  maintenance  and 

8  operation  are  shown  to  be  such  as  shall  require  a  revoca- 

9  tion  of  all  rights  and  privileges  held  under  authority  of  this 

10  Act,  the  court  mav  decree  such  revocation. — In  case  of  such 

11  a  decree,  the  court  may  wind  up  the  business  of  such  grantee 

12  conducted  under  the  rights  in   question,   and  may  declare 

13  such  dam  and  accessory  works  to  be  an  unreasonable  obstruc- 
11  tion  to  navigation  and  cause  their  removal  at  the  expense  of 

15  the  grantee  owning  or  controlling  the   same,   except  when 

16  the  United  States  has  been  previously  reimbursed  for  such 

17  removal,  or  may  provide  for  the  sale  of  the  dam  and  all 

18  accessory    and    appurtenant    works    constructed — under    a^a- 

19  thority   of   this  Act  for  The  further  development  of   water 

20  power,  and  may  make  and  enforce  such  other  and  further 

21  orders  and  decrees  as  equity  demands;  and  in  case  of  such 

22  a  sale  for  the  further  development  of  water  power  the  vendee 

23  shall — take — the — rights    and — privileges — a»d — shall — perform 

24  the  duties  which  belonged  to  the  previous  grantee,  and  shall 

25  assume    such — outstanding    obligations    and    liabilities    aris- 


9 


1  ing  out  of  the  maintenance  and  operation  of  said  dam -and 

2  accessory  works  for  power  purposes  as  the  court  may  deem 

3  eqmtable-in  the^premises, 

4  "-Sec. -8.   That  no  rights  granted  under  the  provisions 

5  of  this  Act  and  no  property  or  project  installed  and  operated 

6  under— the  provisions  or  benefits  of  this  Act  shall  be  assigned 

7  or  transferred  except  upon  the  written  consent  of  the  Sec- 

8  retary  of  War,  except  by  trust  deed  or  mortgage  issued  for 

9  the  purpose  of  financing  the  business  of  such  owner,  and 
10  any  successor  or— assign  of  such  property  or  project  or  of 

_L J_  ftHV    1*1  ii'l  1 1 S    <\ i'V I'll  1 II  ii    H01't*ll  1 M I t^l%    WllOT  1 1 &Y    1 1\    \  1)4 11 11 IH 1--V-    ll'cl  1  \ S- 

12  fer,  judicial  sale,  or  foreclosure  sale  or  otherwise,  shall  be 

13  subject  to  all  the  conditions  of  the  approval  under  which 

14  such  rights  are  held,  and  also  subject  to  all  the  provisions 

15  and  conditions  of  this  Act  to  the  same  extent  as  though 
1<>  such  successor -or -assign  were  the  original  owner  hereunder. 

17  -Skc  9^-That  the  rights  granted  herein  shall  continue 

18  for  a-period  of  fifty  years  from  and  after  the  date  of  the 

19  original  approval,  unless  sooner  revoked  or  forfeited  as  pro- 

20  vided   for  in   Ibis  Act. 

21  "Sir.  4^7- That  upon   not  less  than   two  years'   noln-e 

22  prior  lo  l In-  expiration  of  any  grant  made  hereunder,  and  at 

23  any  lime  after  (lie  expiration  of  such  grant,  upon  six  months' 

24  notice,  febe  Qnitcd  States,  or  any  person  authorized  by  Con- 

II.  R.  16053 2 


10 


1  gresSj  shall  hfrve  the  right  to  take  over  all  of  the  property 

2  ©f  the  grantee  necessary  and  useful  for  the  generation,  traiis- 

3  mission,  or  distribution  of  power.     Such  property  shall  in- 

4  ehifle  the  lands  or  interests  in  lands  acquired  or  used  for 

5  fefee  purposes  of  the  development  and  transmission  of  power, 

6  the  dam  a-nd ---other  structures,  and  the  equipment  necessary 

7  and  useful  for  the  generation  of  power,  and  the  transmission 


8     sy s t em  from  generation  plant  to  initial  poinl 


listribution, 


9 
10 

11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 


23 


24 


ami- the  lock  or  locks  or  other  aids  to  navigation,  but  shall 
not  include  any  other  property  whatsoever. — Before  taking- 
possession  the  United  States  or  the  person  authorized  by 
Congress  shall  pay  therefor    (first)    the  actual  cost  to  the 


grantee  of— ky 

bv  the  grantee  in  tl 


leration  and  drs 


and    i  scrondV^the  fair  value  of  "the 

wi 


oi-  orh 

required  by  tin-  I 

electrical 

have  h; 

and  which  were 

rate.     The  actual 

fair  value  of  o 

ment  between  the 


tcrtire-grantee 


sxumintr 


ires 
ratracts  for 


lave  the  --approval  of  the  Secretai 

faith  a 

lauds  or  Interests  therein  and  the 

'it  \   shall  be --determined  by  agree- 

Par  and  the^svners  of  such 


25 


property,  and  in  the-evei 


Pa  dure  t©--agree  then-by 


11 


1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

L5 

16 

17 

18 

19 

21 
22 

23 
24 


proceedings  instituted  by  the  United  States,  or  by  the  per- 
son authorized  by  the  United  States,  in  the  district  court 
of  the  United  States  within  which  any  portion  of  such  dam 

"Tn  determining  the  fair  yalne  of  the  property  other  than 
lands  or  interests  in  lands  allowance  shall  hp  irmdp  for  dp- 
teri oration,  if  any,  of  thp  existing  strnctnrps  nnd  transmission 
lines,  and  no  value  shall  bp  claimed  or  allowpd  for  thp  rights 
hereby  granted,  for  good  -will,  going  concern,  profit  in  pend- 
ing contracts  for  electrical  energy  or  for  other  conditions  of 
enrrent  or  prospective  business  or  for  any  other  intangible 

"'Sec.  11.  That  in  all  cases  where  the -electric  current 
generated  from  or  by  any-of-the  projects  provided  for  in  this 
Art,  including  leases-  under  section  fourteen  hereof,  shall 
enter  into  interstate  or  foreign  commerce,  the  rates,  charges, 
and  service  for  the  same  to  the  consumers  thereof  shall  be  just 
and  reasonable,  and-every  unjust  and  unreasonable  and  un- 
duly  discriminatory  charge,  rate,  or  service  therefor  is  hereby 
prohibited  and  declared  to  he -H  legal;  and  whenever  the 
Secretary  of  War  shall  be  of  the  opinion  that  the  rates  or 
charges  demanded  <>r  collected  oh  the  service  rendered  for 
Boeh  electric  current  arc  unjust,  unreasonable,  8*  unduly  dis- 
rriuiinatory.  upon  complain  1  niadp  therefor  ami  full 
thereon,  the  Secretary  of  War  is  hereby  authorize) 


12 


1  powered  t<>  determine  mid  p 

2  i\m\  reasonable  rates  and  charges  therefor  to  be  observed  as 

3  the  niiixkMiii  to  be  charged  and  the  service  to  be  rendered; 

4  and  in  case  of  the^violation  ^f  any  such  order  of  the  Secretary 

5  of  War  the  provisions  of  this  Act  relative  to  forfeiture  and- 

6  failure  to  comply  shall  apply.     That  in  the  valuation   for 

7  rate-making  purposes  of  the  property  existing  under   said 

8  approval  of  the  project  there  may  be  considered  any  lock 

9  or  locks,  or  other  aids  to  navigation,  and  all  other  capital 

10  expenditures  required  by  the  United   States,  but  no  value 

11  shall  be  claimed  or  allowed  for  the  rights  hereby  granted  for 

1 2  good  will,  going  concern,  or  any  other  intangible  value. 

13  "The — Secretary — of — War — is — further — authorized — andr 

14  directed  to  include  among  the  conditions  for  his  approval  of 

15  any  plans  or  any  project  herein  provided,  including  leases 

16  under — section — fourteen — hereof, — as — an — express — condition 

17  thereof,   a   clause   reserving   to   the   Secretary   of   War   the 

18  same  rights,   powers,  and  duties  set  forth  in  this  section, 

19  together  with  the  same  penalty  for  violation  thereof:   Pro* 

20  rided,  That  whenever  the  State  in  which  such  current  shall 

21  be  used  shall  have  provided  by  law  adequate  regulation  for 

22  rates,  charges,  and  service  to  the  consumers  for  such  electric 

23  current  and  such  regulation  shall  not  be  unduly  discrimina- 

24  tory  or  unjust  against  the  service  or  charges  in  any  othcr- 

25  State  «-rising-4rom   the   use   of   the   power   from    the   same 


In 
O 


1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

23 

24 


25 


project,  and  such  facts  shall  be  established  to  the  satisfaction 
of  the  Secretary  of  War,  then  in  such  case  the  provisions  of 
this  section  shall  not  apply  to  the  rates,  charges,  and  service 
in  and  for  such  State. 

"That,  except  upon  the  written  consent  of  the  Secretary 
of  War,  no  sale  or  delivery  of  power  shall  be  made  to  a  dis- 
tributing company,  except  in  case  of  an  emergency., 

"The  Secretary  of  War  shall  have  the  right  to  provide 
rules  and  regulations  for  uniform  accounting,  to  examine  all 
books  and  accounts  of  grantees  under  the  terms  of  this  Act, 
to  require  them  to  submit  statements,  representations,  or 
reports,  annual  or  special,  including  full  information  as  to 
; i ssets  and  liabil4tie%-capitali%ation,  cost  of  project,  cost  of 
operation,  the  production,  use. — transmission  and — sale  of 
power.  All  such  statements,  representations — and — reports 
shall  be  upon  oath  unless  otherwise  specified,  and  in  such 
form  and  on  -such  blanks  as  the  Secretary  of  War  may 
requi re,  and  any  person  maki ng  any  false  entry,  statement, 
representation  or  report  undcr-oath  shall  be  subject  to  pun- 
ishmcnl  as  for  perjury. 

"Si:r.  1i\  That  I  lie  grantee  shall  --commence  the  i-im- 
struetion  of  the  dam  and  accessory  works  withi-n  one  year 
from  the  date  oi'  the  approval  hen-m  provided,  and  sha41 
thereafter,  in  good  faith  and  with  due  diligence,  prosecute 
such  construction,  and  shall,  within  tin*  further  term  of  thr-e** 


II 


3 


5 

i\ 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

21 


years,  complete  the  dam  and  afterwards  shall,  within  such 
times  as  the  Secretary  of  War  and  the  Chief  of  Engineers 
shall  prescrihe,  put  in  commercial  operation  such  part  of  the, 
ultimate  development  as  the  Secretary  of  .War,  and  the  Chief 
of  Engineers  shall  deem  necessary  to  supply  the  reasonable 
needs  ofLihe  then  available-market,  and,  shall,  from  time  to 
time-thereafter,  construct  such  portion  of  the  balance  of  such 
ultimate  development  as  said  Secretary  of  War  and  Chief  of 
Engineers  may  direct  and  within  the  time  specified  by  said 
Secretary  of  War  tind  Chief  of  Engineers  so  as  to  supply 
adequately  the  reasonable  market  demands  until  such  ulti- 
mate development  shall  be  completed;  and  extensions  of  the 
periods  herein  specified,  not  to  exceed  two  years,  may  be 
granted  by  the  Secretary  of  War,  on  recommendation  of  the 
( 'hicf  of  Engineers,  when,  in  his  judgment,  the  public  interest 
will  be  promoted  thereby. — In  case  the  grantee  shall  not 
commence  actual  construction  within  the  time  herein  pre- 
scribed, or  as  extended  by  the  Secretary  of  War,  then  the 
authority  as  to  such  grantee  shall  terminate,  and  in  case  any 
dam  and  accessory  works  bo  not  completed  within  the  time 
herein  specified  or  extended  as  herein  provided,  then  the  At- 
torney General,  upon  the  request  of  the  Secretary  of  War, 
shall  institute  proper  proceedings  in  the  proper  district  court 
of  the  United  States  for  the  revocation  of  said  authority,  the 
sale  of  the  works  constructed,  and  such  other  equitable  relief 


15 


provided  for  iii  section  seven  of. 


1  as  the  case  may  dcnn 

2  this  Act. 

3  "Sec.  13.  That  the  right  to  alter,  amend,  or  repeal  this 

4  Act  is  hereby  expressly  reserved  as  to  any  and  all  dams 

5  which  may  be  authorized  in  accordance  with  the  provisions 

6  of  this  Act. — In   such   case  the  United   States   shall   incur 

7  no  liability  for  the  alteration,  amendment,  or  repeal  thereof 

8  to  the  owner  or  owners  or  any  other  persons  interested  in 

9  such  dam. 

10  "Sec.    14.     That   the   Secretary  of  War  be,   and   he  is 

11  hereby,  authorized  to  enter  into  leases  for  the  use  of  surplus 

12  water  and  water  power  generated  at  dams  and  works  con- 

13  structed  wholly  or  in  part  by  the  United  States  in  the  intcr- 
11  ests  of  navigation  at  such  rates,   on   such   terms  and  con- 

15  ditions,  and  for  such  periods  of  time  not  to  exceed  fifty  years, 

16  and  with  such  provision  for  the  periodical  readjustment  of 
IT  rentals  as  may  seem  to  him  just,  equitable,  and  expedient, 

18  subject,   however,   to   the   provisions  of  this   Act  governing 

19  the    authorization^ — maintenance, — and    operation — of    power 
2(1  phmis  and --to-all  regulations  governing  the  use  and  clispo- 

21  sition  of  tin-  power, --so-far-aa  the  same  may  be- -applicable; 

22  and  all  su(4t-lcnscs,  the  parties  thereto,  and  the  terms  and 

23  conditions  thereof,  shall  be  reported  annually  to  <  1ongres*K- 

24  Provided,  Thai  said  Secretary  of  War,  in  making  sueh  leasee 


16 


1  shall  give  preference  to  any  municipal  corporation  or  other 

2  public  corpHmt4<m^wt  operated  for  private  profit. 

3  "Si:c.    15.    That    no   rights   or  privileges  granted   under 
1  this  Ari  and  no  works  constructed,  maintained,  and  operated 

5  U4ider  the  provisions  of  this  Act  shall  be  owned,  trusteed, 

6  or^emit rolled  by  any  device  or  in  any  manner  so  that  they 

7  may  form -a  part  of,  or  in  any  manner  effect,  a  combination 

8  in  the  form  of  an  unlawful  trust  or  form  the  subject  of  an 

10  energy  or  in  mst-rain-t  of  the  generation,  sale, 

1 1  of  electric   energy,-  or   the   exercise   of  any   other   b 

12  contemplated : — gPork/g^^o^pgsejy-Tliat  it  shall  be  -kwfal 

13  umto-the  approvaJ-of— the-Seer-etary  of  War  for  different 

1 4  grantees  to  exchange  and  interchange  currents,  to  assist  one 

15  another  whenever  necessary,  by  supplementing  the  currents 

16  or  power,  and  enable  any  grantee  to  secure  assistance  to 

1 7  carry  on  the  business  and  supply  his  customers,  ae< 

18  therefor  and  paying  therefor  under  regulations 

19  serihed  by  the  Secretary  of  War.- 

20  "In   no   case  shall   such   an  arrangement  be  permitted 

21  te-raisc  the  price,  render  unjust  or  unfair  any  practice,  work, 

22  or-discri  mi  nation,  or  operate  in  restraint  of  trade. 

23  "If   any   grantee   shall    violate   the   provisions    of   this 


feit  all 


ileges  conferred  by 


17 

1  '"Sec.  16.  That  the  word  'poisons'  as  used  in  this  Act 

2  shall  bo  construed  to  import  both  the  singular  and  the  plural, 

3  as  the  case  demands,  and  shall  include  corporations,  com- 

4  panies,  and  associations. — The  word  'dam'  as  used  in  this 

5  Act  shall  be  construed  to  import  both  the  singular  and  plural, 

6  as  the  case  demands^ 

7  "'Sec.   IT.   That  all  of  the  provisions  in   sections   two, 

8  three,  four,  five,  nine,  ten,  eleven,  and  fifteen  of  this  Act 

9  fixing  conditions  of  the  consent  of  Congress  and  regulating 

10  practices  and  charges  between  the  grantees  and  their  cus- 

11  tomers  for  the  construction,  maintenance,  and  operation  of 

12  dams  in  the  navigable   waters   of   the  United   States   shall 

13  apply  alike  to  all  existing  enterprises  in  operation  or  pre- 
11  viously  authorized   in   the  navigable  waters  of  the  United 

15  States  in  which  the  approval  and  supervision  of  the  Secretary 

16  of  War  and  Chief  of  Engineers  are  required,  as  well  as  to 

17  new  projects  in  the  navigable  waters  of  the  United  States 

18  for  which  the  consent  of  Congress  may  hereafter  be  granted, 

19  hi  the  construction,  ^maintenance,  antdr  operation  of  which  the 

20  approval  and  supervision  of  tlte  Secretory  of- War-and  Chief 

21  of  Engineers  shall   be  required.     All  conflicting-provisions 


•>•> 


evious  Act  of  Congress  granting  consent 


23  for   the   construction,    maintenance,   ami    operation   of  any 

24  dam    in    the   navigable   waters   el   the    United    States  in   the 

H.  R.  16053 3 


18 

1  construction,  maintenance,  and  operation  of  which  the  ap- 

2  proval  and  supervision  of  tne-Secretary  of  War  and  the  Chief 

3  of  Engineers,  were  required  are  hereby -repealed,   and   all 

4  such  previous-authorizations  are  so  altered,  amended,  and 

5  modified  hereby  as  to  conform  to  all  the  conditions  and  pro- 

6  visions   in    said   sections   two,    three,    four,    five,    nine,    ten, 

7  eleven  and  fifteen  of  this  Act. 

8  "Seo IS. That  the  provisions  of  this  Act  shall  not 

9  apply  to  irrigation  or  power  dams  or  grants  to  municipal 

10  corporations  aflWting  thp  nsp  of  water  or  water  power  for 

11  municipal  purposes,  ™»  nfhpr  prnjppts  under  the  jurisdiction 

12  of  the  SecTPtflTy  nf  thp  Interior  or  the  Secretary  of  AgricnK 

13  tare  upon  the  public  lands  of  the  United  States  " 

14  That  the  Act  entitled  "An  Act  to  regulate  the  construction 

15  of  dams  across  navigable   waters/'  approved  June  twenty- 

16  third,  nineteen  hundred  and  ten,  be,  and  the  same  is  hereby, 
IT  amended  to  read  as  follows: 

18  "Section   1.    That   the  consent  of  Congress    is    hereby 

19  given  to  any  persons,  as  hereinafter  defined,  after  obtaining 

20  the   permit   of   the   Secretary   of   War   as   hereinafter   pro- 

21  vided,    to    construct,    maintain,    and    operate    a    dam    or 

22  dams    or    diversion    structures,    and    accessory    works,    for 

23  water  power  or  other  purposes  across,  in,  or  along  any  of 

24  the  navigable  waters  of  the  United  States;  and  such  grantee 

25  and  such  permit  shall  at  all  times  be  subject  to  the  pro- 


19 

1  visions  of  this  Act  and  also  subject  to  such  conditions  as 

2  tlie  Secretary  of  War  shall,  in  accordance  with  the  provisions 

3  of  this  Act,  make  a  part  of  such  permit.     Thai   the  word 

4  'persons"  as  used  in  this  Act  shall  be  construed  to  mean  both 

5  the  singular  and  plural  as  the  case  demands,  and  shall  also 
G  include  States,  political  subdivisions  of  States,  municipal  cor- 

7  porutions,  corporations,  companies,  and  associations ;  and  the 

8  term  'grantee'  herein  shall  mean  any  such  persons  to  whom 

9  shall  be  granted  a  permit  as  herein  provided:  Provided,  That 

10  whenever  the  primary  purpose  of  the  grant  or  permit  is  to 

11  furnish  power  for  a  public-utility  purpose  the  grantee  must 

12  be    a    State,    or    a    municipal    corporation,    or    a    political 

13  subdivision    of    a    State,    or    a    public-service    agent    of    a 

14  State,  or  a  public-utility  corporation  organized  and  consti- 

15  tuted  under  the  laws  of  a  State  or  the  United  States,  author- 

16  ized   to  engage  in   the   business  of  furnishing   water,   heat, 

17  or  electric  energy  for  public  or  private    use,    and    whose 

18  rates  and  charges  and  service  shall  be  subject  to  regulation 

19  by  a  duly  constituted  commission   or  other  agency  of  said 

20  Stale  or  Slates;  but   in  any  case  where  any  State  has  not 

21  made  provision  for  authorizing  municipal  corporations,  po- 

22  lilieul  siihdirisioiis  of  the  Slate,  or  public-utility  corporations 

23  or  agencies  to  engage  in  said  business  or  has  not  provided  for 
21  regulating  their  rales,  charges,  and  service,  the  qualifications 
25  Of    Hie   grantee   prescribed    in    this    proviso    shall    not    apply. 


20 

1  dud  iii  such  cases  the  gran  tee  shall  hare  the  qualifications 

2  prescribed  elsewhere  in  this  section,  and  the  rates,  charges, 

3  and  service  of  such  gran  lee  shall  be  subject  to  regulation  by 

4  the  Secretary  of  War,  as  provided  in  section  seven  of  this 
.")  .  let ;  and  no  transfer  of  any  such  permit  or  of  the  rights  there- 
to under  granted,  except  by  trust  deed  or  mortgage  issued  for 

7  ihc  bona  fide  purpose    of    financing    the    business  of  such 

8  grantee,  shall  be  made  by  any  grantee,  without  the  approval 

9  of  the  Secretary  of  War,  to  any  transferee  not  having  the 

10  qualifications  herein  specified  for  a  grantee  hereunder,  and 

11  any  successor  or  assign  of  the  rights  of  any  snch  grantee, 

12  whether  by  voluntary  transfer,  judicial  sale,  or  foreclosure 

13  sale  or  otherwise,  sliull  be  subject  to  all  the  conditions  of  the 

14  permit  under  which  such  rights  are  held  by  such  grantee,  and 

15  also  subject  to  all  the  provisions  and  conditions  of  this  Act  to 
1G  the  same  extent  as  though  such  successor  or  assign  were  the 

17  grantee  hereunder. 

18  "Sec.  2.  That  the  Secretary  of   War  may  grant  a  per- 

19  mit  or  permits  for  such  dam  or  dams  and  accessory  works 

20  upon  the  following  conditions: 

21  "First.  The  plans  and  specifications  for  such   dam  and 

22  all  accessor//   works,  together    with    such    drawings  of  the 

23  proposed  construction  and  such   maps  of  the  proposed  loca- 

24  lion  as  may  be  required  for  a  full  understanding  of  the  sub- 

25  ject,  shall  be  submitted  to  the  Secretary  of  War  and  the 


21 

1  Chief  of  Engineers,  and   when   approved  shall   be   made   a 

2  part  of  such  permit;  and  thereafter  no  change  in  such  plans 

3  or  specifications  shall  be  made  except  as  such  change  shall 

4  be  approved  and  made  a  part  of  such  permit  by  the  Secre- 

5  tary  of  War  and  the  Chief  of  Engineers. 

6  "Second.    The    plans,    specifications,    and    location    for 

7  any  dam  shall  be  such  as  in  the  judgment  of  the  Secretary 

8  of  War  shall  be  best  adapted  to  a  comprehensive  plan  for 

9  the  improvement  of  the  waterway  in  question  for  the  uses  of 

10  navigation  and  for  the  full  development  of  its  water  power 

11  uu<l  for  other  beneficial  public  purposes,  and  best  adapted 

12  to  conserve  and   utilize,  in  tlie  interests  of  navigation  and 

13  water  developments,  the  water  resources  of  the  region. 

11  "Third.   As  part  of  the  conditions  of  such   permit  the 

15  Secretary    of     War    may.   in   so  far  as  he  deems  the  same 

10  reasonably    necessary    to    promote    the   present    and    future 

17  interests  of  navigation  and  consistent  with  a  reasonable  in- 

18  vestment  cost  to  sucli  gvaulce,  make  any  or  all  of  the  fol- 
L9  lowing  requirements:  (a)  That  such  grantee  shall,  to  the 
I'D  extent  necessary  to  preserve  navigation  facilities  at  least 
2\  equivalent    to    those   existing   prior   to    (he   construction    of 

22  such     dam.    const  met .     in     whole    or    in     part,     without    ex- 

23  yi ust  to  the  United  Slates,  in  connection  with  amy  such  dam, 
l' I  a  loch-  or  loclxS,  booms,  sluices,  or  other  structures  for 
iT>  navigation    purposes,    in    accordance    with    plans,   specifica- 


22 

1  tions     and     condition*     approved     by     the     Secretary     of 

2  War    (Hid    made    a    pari    of    such    per  mil;    (b)    that    such 

3  (/ran lee  shall  furnish  free  of  cost  power  for  the  operation  of 
1  the  same;  (c)  that   in   case  such    navigation   facilities  shall 

5  not    lie   made   a   part    of  such    original   construction    at   the 

6  expense  of  the  grantee,  then,   whenever  the   United  States 

7  shall  deem  such  navigation  facilities  necessary,  the  grantee 

8  shall  convey  to  the  United  States,  free  of  cost,  such  of  its  land 

9  and  its  right  of  wag  and  permit  such  control  of  pools  as  mag 

10  be  required  for  such  navigation  facilities,  and  shall  furnish 

11  free  of  cost  power  for  the  operation  of  the  same;  (d)  that 

12  such  grantee  shall  reimburse  the  United  States  for  the  cost  of 

13  aug  investigation  necessary  for  the  approval  of  the  plans  as 
11  herein  provided  and  for  such  supervision  of  construction  as 

15  may  be  necessary  in  the  interest  of  the  United  States;  (e)  that 

16  such  grantee  shall  pay  to  the  United  States  reasonable  charges 

17  in  consideration  of  the  benefits  accruing  to  and  used  bg  such 

18  grantee  through  the  construction,  operation  and  maintenance 

19  by   the   United  States   of  headwater  improvements,  includ- 

20  iug  storage  reservoirs,  on  any  such  stream,  such  charges  to 

21  be  fixed  from  time  to  time  bg  the  Secretary  of  War  and  to, 

22  be  based  upon  a  reasonable  compensation  proportionate  to  the 

23  benefit  actually  received  by  the  grantee  bg  reason  of  any  in- 

24  crease  of  flow  past  or  over  the  water-power  structures  arti- 

25  fieialig    caused    bg    such    headwater   improvement;   and    all 


23 

1  moneys  received  from  such  charges  are  hereby  reserved  and 

2  appropriated  as  a  special  fund  in  the  Treasury  to  be  known 

3  as  'The  headwater  improvement  fund/  from   which  fund  ex- 

4  penditures  for  headwater  improvements  and  maintenance  may 

5  be  made  by  and  in  the  discretion  of  the  Secretary  of  War;  (f) 

6  that  such  grantee  in  ttie  construction,  maintenance,  and  opera- 

7  Hon  of  such  dam  or  diversion  structure  and  accessory  works 

8  may,   with    the  authority  of  the  Secretary  of  War,  occupy 

9  and  use,  to  the  extent  necessary  for  the  project,  any  lands 

10  of  the  United  States,  including  the  public  lands;  and  any  part 

11  of  the  public  lands  may,  on   certification   by  the  Secretary 

12  of  War  that  the  same  is  required  for  navigation  purposes, 

13  be  withdrawn  by  the  President  for  said  purpose  as  provided 

14  in  the  Act  entitled  'An  Act  to  authorize  the  President  of  the 

15  United  States  to  make  withdrawal  of  public  lands  in  certain 

16  cases,  approved  June   twenty-fifth,    nineteen    hundred    and 

17  ten;'  and  for  any  land  of  the  United  States  so  used  and  oc- 

18  eupied    tJie   gran  lee   shall    pay    to    the    United,    Stales    such 

19  reasonable  charges  as  may  be  fixed  by  the  Secretary  of  War; 

20  and  in  fixing  such   charges  consideration  shall  be  taken  of 

21  the   benefits  accruing  from    the   use  and  occupation   of  such 

22  lands  to  the  interests  of  uavigut ion .  as  well  as  to  the  business 

23  of  said  grantee. 

24  "In  firing  such  conditions,  or  any  of  them,  the  Secre- 

25  tary     of     War     shall     also     take  into     consideration     the 


(10) 


1  probable     cost      (<>    such      grantee     of     construction     and 

2  maintenance    and    operation    and    the    probable    consumers' 

3  rate     required       to     produce     a     reasonable     return     upon 
1  the    investment    required    of    such    grantee.     As    between 

5  con  test  in;/   applicants   for   a    permit   hereunder   having   the 

6  legal  qualifications   required   by  this  Act,  preference  shall 

7  be  given  to  that  applicant  which  is  best  qualified  to  expedite 

8  and  realize  the  maximum  useful  development  of  all  the  water 

9  resources  of  the  region;  and  as  between  such  contesting  ap- 

10  plicants  which  appear  equally  well  qualified  in  such  respect, 

11  then  preference  shall  be  given  to  that  applicant  ivhich  has 

12  first  complied  with  the  laws  of  the  State  or  States  in  which 

13  the  dam  or  diversion  structure  is  to  be  constructed.  In  grant- 
11  ing  permits  hereunder  and  fixing  conditions  thereof,  and  in 

15  prescribing  rules  and  regulations  <is  to  the  maintenance  and 

16  operation  of  any  structure  to  which   this  Act  is  applicable, 

17  the  Secretary  of  War,  before  acting,  shall  have  the  report 

18  and  advice  of  the  Chief  of  Engineers. 

10  "Sec.  3.  That  the  control  of  the  level  of  the  pools  above 

20  and  below  such   dam  and  of  the  currents  developed  therein 

21  and    of    the    flow    of    the    water    over    and    past    such    dam 

22  and    the   operation    of   navigation    facilities   which   shall   be 

23  constructed  as  a  part  of  or  in  connection  with  any  such  dam, 
21  whether  at  the  expense  of  such  grantee  or  of  the  United 
25  states,  shall  at  all  times  be  subject  to  such  rules  and  regula- 


25 

1  tions  as  shall  be  deemed    by    the    Secretary  of  War  to  be 

2  reasonable  and  necessary  in  the  interests  of  navigation.    Such 

3  rales   and    regulations    may   include    the    maintenance   and 

4  operation  by  such  grantee,  at  its  own  expense,  of  such  lights 

5  and  other  signals  as  may  be  directed  by  the  Secretary  of  War 

6  and  such  other  lights  and  signals  and  such  fishways  as  may 

7  be  prescribed  by  the  Secretary  of  Commerce,  and  for  failure 

8  to  comply  with  any  such  rule  or  regulation  such  grantee  shall 

9  be  deemed  guilty  of  a   misdemeanor,  and  upon  conviction 

10  thereof  shall  be  punished  as  provided  in   section   eight  of 

11  this  Act. 

12  uSec.  .'/.  That  any  such  permit  shall  not  have  the  effect 

13  to  relieve  the  grantee  from   liability  for  any  damage  occa- 

14  sioned  to  the  property  of  others  by  the  construction,  main- 

15  tenance,  or  operation  of  any  dam  or  of  the  ivorks  appurte- 

16  nant  or  accessory  thereto,  and  the  United  States  shall  in  no 

17  erent  be  liable  therefor.     When  grantee  under  the  provisions 

18  of  this  Act  is  a  State,  municipal  corporation,  or  a  political 

19  subdivision  of  a  State,  or  a  public-service  agent  of  a  State, 

20  or  a  public   utility  or  service  corporation,  it  may  acquire 

21  the  right  to  use  or  damage  any  lands  or  properly  of  others 

22  necessary  to  the  construction,  maintenance,  or  operation  of 

23  any  such  dam  or  diversion  structure  or  of  the  works  appurte- 

H.  R.  16053 4 


26 

1  nant  or  accessory  I  hereto  by  the  exercise  of  the  right  of  emi- 

2  neiil  domain  either  under  the  laics  of  the  State  in  which  such 

3  lands  or  property  are  located,  or,  in  case  such  right  can  not 

4  be  acquired  under  the  lairs  of  such   State,  then   under  the 

5  laws  of  the  United  States  providing  for  the  acquirement  by 
G  condemnation  of  lauds  or  property  for  the  uses  of  navigation. 

7  "Sec.  5.  That  unless  revoked  for  cause  as  provided  in 

8  section  eight  of  this  Act  the  rights  under  any  such  permit  shall 

9  continue  for  a  period  of  fifty  years  from  and  after  the  date 

10  of  the  completing  and  putting  into  commercial  operation  of 

11  the  initial  installation   required   by  the  Secretary  of  War, 

12  as  provided  in  section  nine  of  this  Act,  and  after  the  expira- 

13  tiou  of  said  fifty  years  such  rights  shall  continue  until  re- 

14  voiced  for  cause  as  provided  in  section  eight  of  this  Act  or 

15  until  terminated  and  compensation  has  been   made  to  such 

16  grantee  for  its  property  as  provided  in  section  six  of  this  Act. 

17  "See.  6.  That  at  any  time  after  the  expiration  of  said 

18  fifty  years  the  United  States  may  terminate  the  rights  here- 
in under  granted  upon  the  giving  to  the  grantee  of  one  year's 

20  notice  in  writing  of  such  termination,  and  upon  the  talcing 

21  over  by  the  United  States  of  all  of  the  property  of  the  grantee 

22  dependent  in  whole  or  in  part  for  its  usefulness  upon  the 

23  rights  hereunder  granted,  which  are  necessary  and  appur- 

24  tenant,  or  acquired  and  valuable  or  serviceable  in  the  dis- 

25  tribution  of  water,  err  in  the  generation,  transmission,  and 


27 

1  distribution  of  power,  and  upon  paying  to  the  grantee  the  fair 

2  value  of  said  property,  together  with  the  cost  to  the  grantee 

3  of  the  loch  or  locks,  or  other  aids  to  navigation,  and  all  other 

4  capital   expenditures   required   by   the    United   States,   and 

5  assuming  all  contracts  entered  into  by  the  grantee  prior  to  the 

6  receipt  by  it  of  said  notice  of  termination   which  have  the 

7  approval   of   the   duly   constituted  public  authority   having 

8  jurisdiction  thereof,  or  which  were  entered  into  in  good  faith 

9  and  at  a  reasonable  rate,  in  view  of  all  the  circumstances 

10  existing  at  the  time  such  contracts  were  made.     The  fair 

11  value  of  said  property  and  the  reasonableness  and  good  faith 

12  of  such  contracts  shall  be  determined  by  agreement  between 

13  the  Secretary  of  War  and  the  grantee,  and  in  the  event  of 

14  their  failure  to  reach   unanimous  agreement,   then  by  pro- 

15  ceedings   in   equity  instituted  by  the   United  States  in    the 

16  district  court  of  the  United  States  in  the  district  within  which 

17  any  portion  of  such  dam  may  be  located.     In  the  deter  mi  na- 

18  tion  of  the  value  of  said  property  for  any  purpose  as  between 

19  such  grantee  and  the  United  States  or  any  State  no  value 

20  shall  be  claimed  by  or  allowed  to  the  grantee  for  the  rights 

21  hereunder  grunted. 

22  "Sec.  7.   That  whenever  all  or  any  purl   of  the  power 

23  produced  at  any  dam  or  diversion  structure  authorized  here- 

24  under  is  offered  or  disposed  of  by  the  grantee  to  the  public,  or 

25  for  a  public  utility  purpose,  all  charges,  rales,  and  service  by 


28 

1  any  such  grantee  shall  be  reasonable,  adequate,  and  without 

2  discrimination,  and  shall  be  subject  to  regulation  in  accord- 

3  ance  with  the  lairs  of  the  State  within  which  the  service  is 

4  rendered:  Provided,  That  whenever  in  case  any  State  fails 

5  to  pro  ride  such  lairs  for  the  regulation  of  such  charges,  rates 

6  and  service,  the  Secretary  of  War  shall  be  of  the  opinion, 

7  upon  complaint  made  and  full  hearing  thereon,  that  the  rates 

8  or  charges  demanded  or  collected  and  the  service  rendered  by 

9  (///.//  person   or  corporation   to  the  public  are   unreasonable, 

10  inadequate,  or  unduly  discriminatory,  he  is  hereby  authorized 

11  and  empowered  from  time  to  time  to  determine  and  prescribe 

12  what  shall  be  the  just  and  reasonable  rates  and  charges  to  be 

13  observed  as  the  maximum  to  be  charged  and  the  service  to  be 

14  rendered;  and  in  case  of  the  violation  of  any  such  order  of 

15  the  Secretary  of  War,  the  provisions  of  this  Act  relative  to 

16  forfeiture  shall  apply:  Provided  further,  That  where  the  said 

17  power  or  any  part  of  it  shall  enter  into  interstate  or  foreign 

18  commerce,  Congress  may,  by  proper  legislation,  regulate  the 

19  rates,  charges,  and  services  made  and  rendered,  so  as  to  be 

20  fair  and  reasonable  to  the  grantee  and  the  public:  And  pro- 

21  vided  further,  That  in  the  ruination  for  rate-making  purposes 

22  of  the  property  of  any  such  grantee  there  shall  be  included  the 

23  cost  to  such  grantee  of  the  construction  of  the  lock  or  locks,  or 

24  other  aids  to  navigation,  and  all  other  capital  expenditures  re- 

25  (/nircd  by  the  United  States,  but  no  value  shall  be  claimed  or 


29 

1  alio  iced  for  the  rights  hereby  granted :  And  provided  further, 

2  That  nothing  in  this  Act  shall  be  construed  to  prevent  any 

3  State  in  which  such  dam   with  its  appurtenant  property  is 

4  located,  or  in  which  such  business  is  to  be  conducted,  from 

5  making  and  enforcing  any  lawful  regulations,  including  the 
(>  levying  of  taxes,  with  respect  to  the  property  or  business  of 

7  such  grantee. 

8  "Sec.  8.  That  any  grantee  who  shall  fail  or  refuse  to 

9  comply   with   any  of  the  provisions  of  this  Act  or  any  of 

10  the  conditions  made  a  part  of  any  permit  issued  hereunder 

11  or  any  regulation  or  lawful  order  of  the  Secretary  of  War, 

12  made  in   accordance   with   the  provisions  of  this  Act,  shall 

13  be    deemed    guilty    of    a    misdemeanor,    and    on    conviction 

14  thereof  shall   be  punished   by  a  fine  not  exceeding  $1,000, 

15  in  addition  to  other  penalties  herein  prescribed  or  provided 

16  by    law,    and   every    mouth    such   grantee   shall    remain    in 

17  default   shall    be   deemed   a    new    offense   and   subject   such 

18  grantee    to   additional   penalties    therefor;   and  in   addition 

19  to  said  penalties  the  Attorney  General  may,  on   request  of 

20  the  Secretary  of  War.  institute  proper  proceedings  in  equity 

21  in  the  district  court  of  the  United  States  in  the  district  in 

22  which  such   structure    or    any    of    its    accessory  works  are, 

23  in  whole  or  in  part,  situated,  for  the  purpose  of  having  such 

24  violation  stopped  l>y  injunction,  mandamus,  or  other  process; 

25  and  any  such  district  court  shall  hare  jurisdiction  over  all 


30 

1  such    proceedings  and  shall   have   the  power   to   make  and 

2  enforce  all  writs,  orders,  and  decrees  necessary  to  compel  the 

3  compliance  with  the  lawful  orders  and  regulations  of  the  Sec- 
•4  retary  of  War  and  the  performance  of  any  condition  imposed 

5  under  the  provisions  of  this  Act;  and  if  the  unlawful  main- 

6  tenance  and  operation  be  deemed  by  the  court  to  be  such  as 

7  shall  require,  in  the  public  interest,  a  decree  revoking  all 

8  rights  and  privileges  held  under  authority  of  this  Act,  the 

9  court  may  decree  such  revocation,  and  in   case  of  such  a 

10  decree  the  court  may  wind  up  the  business  of  such  grantee 

11  conducted  under  the  rights  in  question  and  may  decree  the 

12  sale  of  the  dam  or  diversion  structure  and  all  appurtenant 

13  property  constructed  or  acquired   under  authority  of   this 

14  Act,  and  distribute  the  proceeds  to  the  parties  entitled  to  the 

15  same,  and  may  make  and  enforce  such  other  and  further 

16  orders  and  decrees  as  equity  and  justice  may  require;  and  in 

17  case  of  such  sale  the  vendee  shall  take  the  rights  and  privileges 

18  and  shall  perform  the  duties  which  belonged  to  the  grantee, 

19  and  shall  assume  all  outstanding  obligations  and  liabilities  of 

20  the  grantee  which  the  court  may  deem  equitable  in  the  prem- 

21  iscs;  and  in  case  no  purchaser  be  found  the  court  shall,  by 

22  the  appointment  of  a  receiver  or  otherwise,  exercise  all  juris- 

23  diction   necessary  for  the  protection   and  administration  or 

24  disposition  of  the  property  and,  for  the  equitable  execution 

25  of  this  Act. 


31 

1  "Sec.    9.    That    the   grantee   shall    commence    the    con- 

2  struction  of  the  dam  and  accessory  works  within  two  years 

3  from  the  date  of  the  permit  herein  provided,  and  shall  therc- 

4  after,  in  good  faith  and  with  due  diligence,  prosecute  such 

5  construction,  and  shall,  within  the  further  term  of  five  years, 
G  complete  and  put  in  commercial  operation  such  part  of  the 

7  ultimate  development  as  the  Secretary  of  War  shall  deem 

8  necessary  to  supply  the  reasonable  needs  of  the  then  available 

9  market,  and  shall,  from  time  to  time  thereafter,  construct 

10  such  portion  of  the  balance  of  such  ultimate  development  as 

11  said  Secretary   of   War   may  direct   and  within    the    time 

12  specified   so   as   to   supply   adequately   the  reasonable   mar- 
is ket  demands  until  such  ultimate  development  shall  be  com- 

14  pleted;    and    extensions    of    the    periods    herein    specified 

15  may    be  granted    by    the    Secretary    of    War   when,   in    his 

16  judgment,  the  public  interest  will  be  promoted  thereby.     In 

17  case   the   grantee   shall   not   commence   actual   const  ruction 

18  within    the   time   herein    prescribed,   or  as  extended   by  the 

19  Secretary  of  War,  then  the  authority  as  to  such  grantee  shall 

20  terminate,  and  in  case  any  dam  or  diversion  structure  and 

21  accessory  works  be  not  completed  within  the  time  herein  speci- 

22  fied  or  extended  as  herein  provided,  then  the  Attorney  General, 

23  upon    the  request  of  the  Secretary  of   War,  shall  institute 

24  proper  proceedings  in  the  proper  district  court  of  the  United 

25  Stales  for  the  revocation  of  said  authority,  the  sale  of  the 


32 

1  works  constructed,  ami  such  other  equitable  relief  as  the  case 

2  may  demand,  as  provided  for  in  seel  ion  eight  of  this  Act. 

3  "Sec.    10.    The    Secretary   of    War    may    lease    to   any 

4  applicant  having  the  capacity  of  grantee  as  herein  defined, 

5  who  has  acquired  and  owns  the  right  to  use  the  water  for 

6  power  and  other  purposes   under  the  lairs  of  the  State  in 

7  which  a  dam  is  constructed  or  to  be  constructed  by  the  United 

8  States,  the  right  to  utilize  the  surplus  water  over  and  above 

9  that  required  for  navigation  at  any  navigation  dam  now  or 

10  hereafter  constructed,  either  with  or  without  contribution  by 

11  the  applicant,  and  owned  by  the  United  States,  and  on  such 

12  terms  as  may  be  deemed  by  the  Secretary  of  War  for  the 

13  best  interests  of  the  United  States,  and  reasonable  and  fair 

14  to  both  parties,  and  in  awarding  such  lease  preference  shall 

15  be  given  by  the  applicant  whose  plans  are  deemed  by  the  Sec- 

16  retary  of  War  to  be  best  adapted  to  conserve  and  utilize  in 

17  the  public  interest  the  navigation  and  water  resources  of  the 

18  region,  and  all  such  leases  a)id  the  parties  thereto  and  the 

19  terms  and  conditions  thereof  shall  be  reported  annually  to 

20  Congress.     The  charges  and  rents  arising  from  such  lease  or 

21  leases  are  liereby  reserved  and  appropriated  as  a  special  fund 

22  in  Hie  Treasury  to  be  expended  for  the  maintenance  of  said 

23  dams  and  the  further  improvement  of  the  waterway  in  which, 
21  the  same  may  be  situated  under  the  direction  of  the  Secretary 
25  of  War. 


33 

1  "Sec.  11.  That  this  Act  shall  not  affect  the  rights  of  any 

2  person,  company,  or  corporation  as  to  the  construction,  main- 

3  tenance,  or  operation  of  any  structures  heretofore  constructed 

4  or  upon  which  construction  has  been  begun,  under  permit  or 

5  approval  of  the  Secretary  of  War  and  Chief  of  Engineers  or 

6  other  authority  heretofore  lawfully  granted:  Provided,  That 

7  in  the  operation  of  any  such  structures  and  accessory  works 

8  the  provisions  of  sections  three,  seven,  eight,  twelve,  and  thir- 

9  teen  of  this  Act  shall  apply  to  the  same  extent  as  if  such  struc- 

10  tures  had  been  authorized  under  this  Act,  and  all  conflicting 

11  provisions  relating  to  the  operation  of  said  structures  and 

12  accessory  ivories  contained  in  any  authority  heretofore  law- 

13  fully  granted  are  hereby  altered,  amended,  or  repealed  so 

14  as   to   conform  with   the  provisions   of  said   sections   three, 

15  seven,  eight,  twelve,  and  thirteen  of  this  Act:  And  provided 

16  further.  That  upon  application  by  any  person,  company,  or 

17  corporation  having  the  capacity  of  grantee  as  herein  defined, 

18  which  is  now  constructing  or  operating  any  structures  herein 

19  specified,  across,  in,  or  along  any  navigable  waters  of  the 

20  United  States  under  authority  heretofore  lawfully  granted, 

21  the  Secretary  of  War  may  issue  to  such  applicant  a  permit  in 

22  accordance  with   the  provisions  of  this  Act.  <md  in   such  a 

23  case  the  provisions  of  this  Act  shall  Income  extended  to  such 

24  applicant  as  a  grantee  hereunder :  Provided  further,  That  the 

H.  R.  16053 5 


34 

1  provisions  of  this  Act  shall  not  apply  to  irrigation  or  power 

2  dams  or  grants  to  municipal  corporations  affecting  the  use 

3  of  water  or  water  power  for  municipal  purposes  or  to  other 

4  projects  under  the  jurisdiction  of  the  Secretary  of  the  Interior 

5  or  the  Secretary  of  Agriculture,  upon  the  public  lands  of  the 

6  United  States. 

7  "Sec.  12.   That  the  ivories  constructed  and  maintained 

8  under   authority   of   this   Act   shall    not   be   owned,    leased, 

9  trusteed,  possessed,  controlled,  or  operated  by  any  device  or 

10  in  any  manner  so  that  they  form  part  of  or  in  any  way  effect 

11  any  combination  in  the  form  of  an  unlawful  trust  or  mo- 

12  nopoly,  or  form  the  subject  of  any  unlawful  contract  or  con- 

13  s piracy  to  limit  the  output  of  electric  energy  or  in  restraint 

14  of  trade  with  foreign  nations  or  between  two  or  more  States 

15  or  Territories,  or  within  any  one  State  or  Territory,  in  the 

16  generation,  sale,  or  distribution  of  electric  energy. 

17  "Sec.  IS.  That  the  right  to  alter,  amend,  or  repeal  this 

18  Act  is  hereby  expressly  reserved:  Provided,  That  in  case  any 

19  grantee   hereunder   shall,    at    the    time    of   such    alteration, 

20  amendment,  or  repeal,  have  exercised  rights  in  accordance 

21  with  this  Act,  such  rights  and  the  property  used  thereunder 

22  shall  be  deemed  property  rights  of  such  grantee,  of  which 

23  such  grantee  shall  not,  until  the  time  herein  fixed  for  termi- 

24  nation,  be  deprived  by  such   alteration,  amendment,  or  re- 


35 

1  peal,  and  then  only  upon  the  conditions  provided  in  case  of 

2  termination  by  section  six  of  this  Act" 

Passed  the  House  of  Representatives  August  4,  1914. 
Attest :  SOUTH  TRIMBLE, 

Clerk. 
By  D.  K.  HEMPSTEAD, 

Enrolling  Clerk. 


APPENDIX    D 


Calendar  No.  786 

ss,  u     r* 

3d  Session. 

[Report  No.  898.] 


63d  CONGRESS,    ■_■        p       1C^70 


IN  THE  SENATE  OF  THE  UNITED  STATES. 

August  25,  1914. 

Read  twice  and  referred  to  the  Committee  on  Public  Lands. 

January  11,  1915. 
Reported  by  Mr.  Myers,  with  amendments. 

[Omit  the  part  struck  through  and  insert  the  part  printed  in  italic] 


AN  ACT 

To  provide  for  the  development  of  water  power  and  the  use  of 
public  lands  in  relation  thereto,  and  for  other  purposes. 

1  Be  it  enacted  by  the  Senate  and  House  of  Representor 

2  tives  of  the  United  States  of  America  in  Congress  assembled, 

3  That  the  Secretary  of  the  Interior  be,  and  hereby  is,  author- 

4  ized  and  empowered  directed,  under  general  regulations  to  be 

5  fixed  by  him,  and  under  such  terms  and  conditions  ;is  he  may 
(5  prescribe,  not  inconsistent  with  the  terms  of  this  Act,  to  lease 

7  to  citizens  of  the  United  States,  or  to  any  association  of  such 

8  persons,  or  to  any  corporation  organized  under  the  laws  of  the 

9  United   Stales,  or  any  Slate  or  Territory  thereof,  any  part 
10  of  the  public  lands  of  the  United  States  (including  Alaska), 


1  reserved  or  unreserved,  including  lands  in  national  forests, 

2  the    Grand    Canyon    and    Mount    Olympus    national    nionu- 

3  ments,  and  other  reservations,  not  including  national  parks 

4  or  military  reservations,  for  a  period  not  longer  than  fifty 

5  years  o/  fifty  years  unless  the  applicant  and  the  Secretary  of 
G  the  Interior  agree  on  a  shorter  period  as  the  applicant  for  lease 

7  may  elect,  for  the  purpose  of  constructing,  maintaining  and 

8  operating  dams,   water   conduits,   reservoirs,   power   houses, 

9  transmission  lines,  and  other  works  necessary  or  convenient 

10  to  the  development,  generation,  transmission,  and  utilization 

11  of  hydroelectric  power,  which  leases  shall  be  irrevocable  ex- 

12  cept  as  herein  provided,  but  which  may  be  declared  null  and 

13  void  upon  breach  of  any  of  their  terms :  Provided,  That  such 

14  leases  shall  be  given  within  or  through  any  of  said  national 

15  forests  or  other  reservations  only  upon  a  finding  by  the  chief 
1G  officer  of  the  department  under  whose  supervision  such  forest, 

17  national  monument,  or  reservation  falls  that  the  lease  will 

18  not  injure,  destroy,  or  be  inconsistent  with  the  purpose  for 

19  which  such  forest,  national  monument,  or  reservation  was 

20  created  or  acquired:  Provided  further,  that  in  the  granting 

21  of  leases  under  this  Act  the  Secretary  of  the  Interior  may, 

22  in  his  discretion,  give  preference  to  applications  for  leases  for 

23  the  development  of  electrical  power  by  States,  counties,  or 

24  municipalities,  or  for  municipal  uses  and  purposes:  Provided 

25  further,  That  for  the  purpose  of  enabling  applicants  for  a 


1  lease  to  secure  the  data  required  iu  connection  therewith,  the 

2  Secretary  of  the  Interior  may,  under  general  regulations  to 

3  be  issued  by  him,  grant  preliminary  permits  authorizing  the 
1  occupation  of  lands  valuable  for  water-power  development 

5  for  a  period  not  exceeding  one  year  in  any  case,  which  time 

6  may,  however,  upon  application,  be  extended  by  the  Seere- 

7  tary  of  the  Interior  if  the  completion  of  the  application  for 

8  lease  has  been  prevented  by  unusual  weather  conditions  or 

9  by  some  special  or  peculiar  cause  beyond  the  control  of  the 

10  permittee:  Provided,  That  no  lease  shall  be  (/ranted  until  the 

11  applicant  has  the  right  from  the  State  or  States  wherein  said 

12  project  is  to  be  loaded,  to  sufficient  water  to  develop  or  gen- 

13  erate  the  eh ctrical  energy  intended  to  be  generated  by  appli- 
11  cant's  proposed  project. 

l.~)  Sec  2.  That  each  lease  made  in  pursuance  of  this  Act 

1G  shall  provide  for  the  diligent,  orderly,  and  reasonable  devel- 

17  opment  and  continuous  operation  of  the  water  power,  subject 

18  to  market  conditions,  and  shall  provide  that  the  lessee  shall 

19  at>  -no-4ime-contract  for  the  delivery  to  any  one  consumer  of 

20  electrical  energy  in  excess -of-  fifty  per  centum  of  the  total 

21  output. 

22  Sec.  3.    That  in   case  of  the  development,  generation, 

23  transmission,  a-f+d-or  use  of  power  or  energy  under  such  a  lease 

24  in  a  Territory,  or  in  two  or  more  States,  the  regulation  and 

25  control  of  service  and  of  charges  for  service  t<>  consumers  and 


1 

9 


o 

o 


4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

11 

15 

16 

17 

18 

19 

20 

21 
•>.) 

23 

24 

25 


of  the  issuance  of  stock  and  bonds  by  the  lessee  is  hereby 
conferred  upon  the  Secretary  -of-the-Interior  or  comniittecUto 
suc-U  body  as  may  be  provided  by  Federal  statute  Interstate 
Commerce  Commission:  Provided,  That  the  physical  combi- 
nation of  plants  or  lines  for  the  generation,  distribution,  and 
use  of  power  or  energy  under  this  Act  or  under  leases  given 
hereunder  not  in  violation  of  law  may  be  permitted,  in 
the  discretion  of  the  Secretary  of  the  Interior,  but  combina- 
tions, agreements,  arrangements, — or — understandings, — ex- 
press--or-4m-pUed,  to  I mH4^4he— output  of  el 


to-restrain^trade  with-  foreign  nations 


kween  two  or 


more  States  or  within  any  one  State,  or  to  fix,  maintain,  or 
increase  prices  for  electrical  energy  or  service  arc  hereby 
forbidden. 

Sec.  4.  That  except  upon-  the  written  consent  of  the 
Secretary  of  the  Interior  no  sale  or  delivery  of  power  shall 
bo  made  to  a -distributing  company,  except  in  case  of  an 
emergency  and  then  only  for  a  period  not  exceeding  thirty 
days,  nor  shall  any  lease  issued  under  this  Act  be  assignable 
or  transferable  without  such  written  consent :  Provided,  how 
ever-,  That  no  lessee  under  this  Act  shall  create  any  lien 
upon  any  power  project  the  land  leased  nor  upon  any  power 
project  within  a  Territory,  or  in  I  ended  for  use  in  the  genera- 
tion anil  transmission  of  water  power  or  energy  in  two  or 
more  States  and  developed  under  a  permit  issued  under  this 


1  Act   by   mortgage   or   trust   deed,    except   approved   by   the 

2  Secretary  of  the  Interior  Interstate  Commerce  Commission 

3  and  for  the  bona  tide  purpose  of  financing  the  business  of  the 
1  4essee  construction  or  operation  of  said  project.     Any  succes- 

5  sor  or  assign  of  such  property  or  project,  whether  by  volun- 

6  tary  transfer,  judicial  sale,  foreclosure  sale,  or  otherwise,  shall 

7  be  subject  to  all  the  conditions  of  the  approval  under  which 

8  such  rights  are  held,  and  also  subject  to  all  the  provisions 

9  and  conditions  of  this  Act  to  the  same  extent  as  though  such 

10  successor  or  assign  were  the  original  lessee  hereunder. 

11  Sec.   5.    That   upon  not  less  than  three  years'  notice, 

12  which  may  be  issucd-a^any-time-itfter" three  years  immedi- 

13  ately  prior  to  the  expiration  of  any  lease  under  this  Act,  the 

14  United.  States  shall  -have-the-right  to  take  over  the  properties 

15  which-are-depondent^4n-wholc  or  in  part,  for  their  useful- 

16  ness  on  the  continuance  t)f  the  lease  herein — provided  for, 

17  ami  which  may  have^ueen  acquired  by  any  lessee  acting 
L8  under  the  provisiom^of-thiirAct,  upon  condition:  that  it  shall 

19  pay,  before  taking  possession,  tirst,^the  actual^costs  of  rights 

20  of  way,  water  rights,  lands,  and  interests  therein   purchased 

21  and   used  by  the  lessee  in  the  generation  and  distribution  of 

22  electrical  energy  under  the  lease,  and,  second,  the  reasonable 
2:5  value  of  all  other  property  taken  over,  including  struc- 
24  tares  and  fixtures  acquired,  erected,  or  placed  upon  the  lands 
2.")  and    included    in    the   generation    or   distribution    plant,    and 


1 


3 


which  are  depend 


hereinaboA 


rth,  such  reason^- 


able  value  to  be  deter 
the  Secretary  of  the 


4      tliev  can  n< 


reer-by^: 


6 

* 

8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 


25 


26 


States  distriet-eo 
reasonable   value   shall 


u  tual r --agreement— bete 

tesee,  and,— in— case 
itnted  in  the  -United- 

i  I  *   *    I'  'I 


value  of  the  franchise  or-good  will  or  profits  to  be  earned - 
on  pending- con tracts-er an^  other  intangible-element.-  That 

ii pon  not  less  than  three  years  notice,  which  may  be  issued 
at  any  time  after  three  years  immediately  prior  to  the  ex- 
piration of  any  lease  under  this  Act,  the  United  States  shall 
have  the  right  to  take  over  all  the  properties  which  are  de- 
pendent in  whole  or  in  part  for  their  usefulness  on  the  con- 
tinuance of  the  lease  herein  provided  for,  which  may  have 
been  acquired  by  any  lessee  under  the  provisions  of  this 
Act,  or  the  right  to  take  over,  upon  mutual  agreement  with 
the  lessee,  a  severable  and  complete  unit  of  any  such  power 
system,  upon  condition  that  it  shall  pay  in  a  lawful  warrant 
drawn  on  the  Treasury  of  the  United  States,  or  otherwise,  be- 
fore taking  possession  the  fair  value  of  such  property,  such 
value  to  be  det evmi ned  by  mutual  agreement  between  the  Sec- 
retary  of  the  Interior  and  the  lessee,  and,  in  case  they  can  not 
agree,  by  proceedings  instituted  in  the  United  States  district 
court  for  that  purpose:  Provided,  That  such  fair  value  shall 
not  include  or  be  affected  by  the  value  of  any  public  lands, 
rights  of  way,  or  other  property  leased  or  granted  under  this 


I 


1  Act  by  the  United  States  or  by  the  value  of  the  franchise,  good 

2  will,  value  as  a  going  concern,  future  profits  from  pending 

3  contracts,  or  prospective  revenues,  profits,  or  dividends. 

4  Sec.  6.    That  in  the  event  the  United  States  does  not 

5  exercise  its  right  to  take  over,  maintain,  and  operate  the 

6  properties  as  provided  in   section  five  hereof,   or  does  not 

7  renew  the  lease  to  the  original  lessee  upon  such  terms  and 

8  conditions  and  for  such  periods  as  may  be  authorized  under 

9  the  then  existing  applicable  laws,  the  Secretary  of  the  Inte- 

10  rior  is  authorized,  upon  the  expiration  of  any  lease  under 

11  this  Act,  to  lease  the  properties  of  the  original  lessee  to  a 

12  new  lessee  upon   such    terms,   under  such   conditions,    and 

13  for  such  periods  as  applicable  laws  may  then  authorize,  and 

14  upon  the  further  condition  that  the  new  lessee  shall  pay  for 

15  the  properties  as  provided  in  section  five  of  this  Act.     In 
10  the  event  the  United  States  does  not  exercise  its  right  to  take 

17  over  flu-  properties,  as  provided  in  section  five,  and  a  reneioal 

18  of  the  lease  l<>  the  original  lessee  is  not  made,  and  no  lease  is 

19  made  of  the  properties  to  a  new  lessee,  then  the  lease  at  the 

20  Option  of  the  lessee  shall  continue  in  existence  upon   the  fevms 

21  and  conditions  in  force  at  the  lime  fixed  for  Us  expiration 

22  until  such  lime  us  the  property  is  taken  over  by  the  United 

23  Stales,  as  provided  in  section  five,  or  by  a  new  lessee,  as 

24  provided  in  .section  six,  ov  the  least    is  renewed:  Provided, 
2.~>  That    Ho     original    le8See    shall    have    a    preference    right    to 


8 


1  renewal  over  and  above  any  new   lessee   upon   such  terms 

2  and  conditions  as  the  law  and  regulations  then  in  force  shall 

3  authorize. 

4  Sec.  7.    T-hat  where,  in  tb^-^adgment  of  the  Secretary- 

5  of  the  Interior,  the  public  interest-requires  or  justifies  the 

6  execution  by  any  lessee  of  contracts  for^liie-sale^fcnd  delivery^ 

7  of  electrical  energy  4oj^periods  extending-neyond  the  life- 


8     of^the-lease^-but^for 


trs-  thereafter-, 


9  su^-h  contracts  may  be  entered  into  upo^ 

10  the  said  Secre4aryy-and— thei^eaftei^n  tl 

11  cise-by  the4Jnited-&tates  of  the  option^ 

12  in— the  manner  provided  in  sections 

13  United  States  or  its  new  lessee-shall  assume-ai 
11  such-contracts  entered  into  by  the  first  lessee  That  where 

15  the  public  interest  requires  or  justifies  the  execution  by  the 

16  lessee  of  contract*  for  the  sale  and  delivery  of  electrical  energy 

17  for  periods  extending  not  to  exceed  twenty-five  years  beyond 

18  the  fifty-year  period  herein  named,  such   contracts  may  be 

19  entered  into  upon  the  approval  of  the  Public  Service  Com- 

20  mission  or  similar  authority  in  the  State  in  which  the  sale  or 

21  delivery  of  power  is  made,  and   upon   the  approval  of  the 

22  Secretary  of  the  Interior  of  the  United  States;  or  if  sold  or 

23  delivered  in  a  Territory  or  in  a  State  without  a  regulating 

24  authority,  then   upon  the  approval  of  the  Secretary  of  the 

25  Interior;  and  thereafter,  in  the  event  of  the  termination  of  the 


9 


1  lease  as  herein  provided,  the  United  States  or  any  subsequent 

2  lessee  shall  assume  and  fulfill  all  such  contracts  entered  into 

3  by  the  original  lessee. 

4  Sec.  8.     That  for  the  occupancy  and  use  of  lands  and 

5  other  property  of  the  United   States  permitted  under  this 
G  Act  the  Secretary  of  the  Interior  is  authorized  to  specify  in 

7  the  lease  and  to  --eoHeefr- charges  or  rentals    for — aH power 

8  developed  and  ^old  or  used  by  the  lessee  for  any  purpose 

9  other  than  the  operation  of  the  plant,  and  the  proceeds  shall 

10  be  paid  into,  reserved^  and  appropriated  as  a  part  of  the 

1 1  ree lam alion  fund  created  by  the  Act  of  Congress  approved 

12  June    seventeenth^, — nineteen    hundred    and — two^ — known — a& 


13     th 


Initiation 


-and  after  use  thereof  in  the  construction 


14  of  reclamation   works  and  upon  return  to  the  reclamation 

15  fund  of  any  such  niotn-vs4n-the  manner  provided  by  the  rec- 

1 6  lamafitffl— Act  — and    Acts  -amendatory-  thereof    and — supple- 

17  mental  thereto,  fifty  per -ventnm-of  the  am 

18  and  returned  to  the  reclamation  fund  shall 

19  Secretary  of  the  Treasury  after  the  expira 

20  year  to  the  State  within  the  boundaries  of  which  the  hydro- 

21  electric   power  or  energy   is  generated   and   developed,   said 

22  moneys   to   be   used    by   SUCh    Stale    for    the   support   of   public 

23  schools  or  other  educational  institutions  or  for  (lie  construc- 

24  lion  of  public  improvements,  or  both,  as  the  legislature  of  the 

II.  R.  L6673 2 


10 

1  Ktnto  iiiny  "direct^— YVor/rfocfr—Thrtt   leases    for    the   develop- 

2  m out  of  power  by  muni cipal  corporations  solely  for  munici- 

3  pal  use  shut!  be  issiretl^without  rental  charge,  and  that  leases 
1  for  development  of  power  not  in  excess  of  twenty- 

5  power  may  be  issued  to  individuals  or  association 

6  mestic,  mining  or  irrigation  use  without  such  charge.     That 

7  for  the  occupancy  and  use  of  lands  and  other  property  of  the 

8  United  States  permitted  under  this  Act,  the  Secretary  of  the 

9  Inferior  is  authorized  to  specify  in  the  lease  and  to  collect 

10  charges   or   rentals   for   all   land   leased,    which   charges   or 

11  rentals  may  in  the  discretion  of  the  Secretary  he  measured 

12  by  the  power  developed  and  sold  or  used  by  the  lessee  for 

13  any  purpose  other  than  the  operation  of  the  plant,  and  of 
11  the  proceeds  fifty  per  centum   thereof  shall  be  paid  by  the 

15  Secretary  of  the  Treasury  after  the  expiration  of  each  fiscal 

16  year  to  the  State  within   which   the  hydroelectric  energy  is 

17  generated  and  developed.     The  remaining  fifty  per  centum 

18  shall  be  paid  into,  reserved,  and  appropriated  as  a  part  of  the 

19  reclamation  fund,  created  by  the  Act  of  Congress  approved 

20  June  seventeenth,  nineteen  hundred  and  two,  known  as  the 

21  reclamation  Act:  Provided,  That  if  leases  shall  be  made  of 

22  taints  within  Indian  reservations  the  proceeds  of  charges  or 

23  rentals  of  lands  leased  which  are  situated  within  Indian 
21  reservations  shall  be  placed  in  the  Treasury  of  the  United 
25  Stales  to  the  credit  of  the  Indians  of  the  reservation  in  which 


11 

1  the   lands   so    leased   are   situated:  Provided    further,    That 

2  leases  for  the  development  of  power  by  municipal  corpora- 
's tions  for  municipal  use  shall  be  issued  without  rental  charge 

4  and  that  leases  for  development  of  power  not  in  excess  of 

5  twenty-five  horsepower  may  be  issued  to  individuals  or  asso- 

6  ciations    for    domestic,    mining,    or    irrigation    use    without 

7  charge. 

8  Sec,  9.     That  in  case  of  the  development,  generation, 

9  transmission,  or  use  of  power  or  energy  under  a  lease  given 

10  under  this  Act  in  a  State  which  has  not  provided  a  commis- 

11  sion  or  other  authority  having  power  to  regulate  rates  and 

12  service  of  electrical  energy  and  the  issuance  of  stock  and 

13  bonds  by  public-utility  corporations  engaged  in  power 
11  development,  transmission,  and  distribution,  the  control  of 
15  service  and  of  charges  for  service  to  consumers  and  stock 
1G  and  bond  issues  shall  be  vested  in  the  Secretary  of  the 
IT  Interior  or  committed  to  such  body  as  may  be  authorized  by 

18  Federal  statute  until  such  time  as  the  State  shall  provide  a 

19  commission  or  other  authority  for  such  regulation  and  control. 

20  Sec.   10.     That    where    the    Secretary    of    the    Interior 

21  shall  determine  that    the  value  of  any  lands,  heretofore  or 

22  hereafter  reserved  as  water-power  sites  or  for  purposes  in 
'2'.\  connection  with  water-power  development  or  electrical  trans- 

24  mission,  will  not  lie  materially  injured  for  such  purposes  by 

25  either  location,  entry,  or  disposal,  the  same  may  he  allowed 


12 

1  under  applicable  land  laws  niton  the  express  condition  that 

2  all  such  locations,  entries,  or  other  methods  of  disposal  shall 

3  be  subject  to  the  sole  right  of  the  United    States    and    its 

4  authorized  lessees  to  enter  upon,  occupy,  and  use  any  part 

5  or  all  of  such  lands  reasonably  necessary  for  the  accomplish- 
es ment  of  all  purposes  connected  with  the  development,  gen- 

7  eration,  transmission,  or  utilization  of  power  or  energy,  and 

8  all  rights  acquired  in  such  lands  shall  be  subject  to  a  reserva- 

9  tion  of  such  sole  right  to  the  United  States  and  its  lessees, 

10  which  reservation  shall  be  expressed  in  the  patent  or  other 

11  evidence   of   title:   Provided,   That   locations,   entries,   selec- 

12  tions,  or  filings  heretofore  allowed    for    lands    reserved    as 

13  water-power  sites  or  in  connection  with  water-power  devel- 

14  opment  or  electrical  transmission  may  proceed  to  approval 

15  or  patent  under  and  subject  to  the  limitations  and  conditions 

16  in  this  section  contained,  but  nothing  herein  shall  be  con- 

17  strued  to  deny  or  abridge  rights  now  granted  by  law  to  those 

18  seeking  to  use  the  public  lands  for  purposes  of  irrigation  or 

19  mining  alone. 

20  Sec.   11.   That  the  Secretary  of  the  Interior  is  hereby 

21  authorized  to  examine  books  and  accounts  of  lessees,  and  to 

22  require    them    to    submit    statements,    representations,    or 

23  reports,   including  information  as  to  cost  of  water  rights, 

24  lands,  easements,  and  other  property    acquired,  production, 

25  use,  distribution,  and  sale  of  energy,  all  of  which  statements, 


13 

1  representations,  or  reports  so  required  shall  be  upon  oath, 

2  unless  otherwise  specified,  and  in  such  form  and  upon  such 

3  blanks  as  the  Secretary  of  the  Interior  may  require;  and 

4  any  person  making  any  false  statement,  representation,  or 

5  report   under  oath   shall   be  subject   to   punishment  as   for 

6  perjury. 

7  Sec.     12.     That     any     such     lease     may     be     forfeited 

8  and   canceled,    by   appropriate   proceedings,    in   a    court   of 

9  competent  jurisdiction  whenever  the  lessee,  after  reasonable 

10  notice,  in  writing,  as  prescribed  in  the  lease,  shall  fail  to 

11  comply  with  the  terms  of  this  Act  or  with  such  conditions 

12  not  inconsistent  herewith  as  may  be  specifically  recited  in  the 

13  lease. 

11  Sec.   13.   That  the  Secretary  of  the  Interior  is  hereby 

15  authorized  to  perform  any  and  all  acts  and  to  make  such 

16  rules  and  regulations  as  may  be  necessary  and  proper  for 

17  the  purpose  of  carrying  the  provisions  of  this  Act  into  full 

18  force  and  effect. 

11)  SEC.    14.   That  nothing  in   this  Act   shall   be  construed 

20  as  affecting  or  intended  to  affect  or  to  in  any  way  interfere 

21  with  the  laws  of  any  State  relating  to  the  control,  appro- 

22  priation,  use,  or  distribution  of  water. 

23  SEC.   15.   Thai   all  Acts  or  pails  of  Acts  providing  for 

24  the  use  of  the  lands  of  the  United  States  for  any  of  the  pur- 

25  poses   to   which    this  Act   is  applicable  are   hereby  repealed 


II 

1  to  the  extent  only  of  any  conflict  with  this  Act:  Provided, 

'1  however,  That  the  provisions  of  the  Act  of  February  fifteenth, 

3  nineteen   hundred  and  one    (Thirty-first   Statutes  at  Large, 

1  page  seven  hundred  and  ninety),  shall  continue  in  full  force 

5  and   effect  as  to  lands  within   the  Yosemite,   Sequoia,  and 

G  General  Grant   National  Parks  in  the  State  of  California: 

7  And  provided  further,  That  the  provisions  of  this  Act  shall 

8  not  be  construed  as  revoking  or  affecting  any  permits  or 

9  valid,  existing  rights  of  way  heretofore  given  or  granted  pur- 

10  suant  to  law,  but  at  the  option  of  the  permittee  any  permit 

11  heretofore  given  for  the  development,  generation,  transmis- 

12  sion,   or  utilization   of  hydroelectric    power    may    be    sur- 

13  rendered  and  the  permittee  given  a  lease  for  the  same  prein- 
11  ises  under  the  provisions  of  this  Act. 

15  Sec.   16.   That  this  Act  shall   not  apply  to  navigation 

16  dams  or  structures  under  the  jurisdiction  of  the  Secretary 

17  of  War  or   Chief  of   Engineers,   or   to   lands   purchased   or 

18  acquired  by  condemnation   by  the  United   States,   or  with- 

19  drawn    by    the    President    under    the  Act    approved    June 

20  twenty-fifth,    nineteen    hundred   and   ten,    entitled   "An   Act 

21  to  authorize  the  President  of  the  United  States  to  make  with- 

22  drawals  of  public  lands  in  certain  cases,"  where  such  lands 

23  are  purchased,  acquired  by  condemnation,  or  withdrawn  by 

24  the  President  for  the  sole  purpose  of  promoting  navigation. 


15 

1  Sec.  17.  That  in  instances  where  only  five  per  centum  or 

2  less  of  the  lands  actually  necessary  and  required  for  the  con- 

3  struct  ion.  maintenance,  and  operation   of  dams,  water  con- 

4  duits,  reservoirs,  power  houses,  transmission  lines,  and  other 

5  works  for  the  development,  generation,    transmission,    and 

6  utilization  of  hydroelectric  power  in  any  one  proposed  sepa- 

7  rate,  distinct,  and  complete  plant  or  project  arc  lands  of  the 

8  United  States  Government  and  such  Government  lands  are 

9  to  be   used  only  for  ovcrpowagc,  reservoir,  or  transmission 

10  purposes  and  not  in  whole  or  in  part  as  a  dam  site  or  the  site 

11  of  a  power  house  nor  for  the  erection  of  buildings  or  opera- 

12  Hon  of  machinery,  the  Secretary  of  the  Inferior  may,  in  his 

13  discretion,  lease  such  lauds  to  an  applicant  for  not  more  than 

14  fifty  years,  at  such  rental  price  and  upon  such  terms  as  lie 

15  may  deem  just,  free  from  all  or  any  other  of  the  terms,  con- 

16  ditious.  provisions,  and  requirements  of  this  Act  which  the 

17  Secretary  of  the  Interior  may  see  fit  to  waive. 

18  Sec.  18.    That    authority    is    hereby    conferred    upon    the 

19  Stut(  of  Colorado  or  any  citizen  or  citizens  directly  interested, 

20  or  both,  to  institute  and  prosecute  an  action  at  law  or  in 
'1\  equity  against   the  Secretary  of  the   Interior,  or  the  ('om- 

22  missioner  of  the  Central  Land  Office,  or  both,  to  determine 

23  its  right  and  the  rights  of  its  citizens  to  appropriate  and 

24  apply  to  bent  ficiul  uses  the  waters  of  the  b'io  Crande  Rirer 

25  and  its  tributaries  within  its  geographical  boundaries.    Such 


16 

1  action  may  be  instituted  in  the  district  court  of  the  United 

2  States  within   the  Stall1  of  Colorado,  and  any  judgment  or 

3  decn ■(•  therein  shall  be  subject  to  review  by  writ  of  error  or 

4  a ppial  as  provided  by  law  in  other  cases. 

5  Sec.    I!>.    That  authority  is  hereby  conferred  upon   the 

6  stale  of  Nebraska  or  any  citizen  or  citizens  directly  interested, 

7  or  both,  to  institute  and  prosecute  an  action  at  law  or  in 

8  equity  against  the  Secretary  of  the  Interior  or  the  Director 

9  of  the  Reclamation  Service,  or  both,  to  determine  its  right 

10  and  the  rights  of  its  citizens  in  and-  to  the  water  of  the  North 

11  Platte  River  stored  by  the  Pathfinder  Dam  in  the  Pathfinder 

12  Reservoir  in   the  State  of  Wyoming.     Such  action  may  be 

13  instituted  in  the  district  court  of  the  United  States  within  the 
11  State  of  Nebraska,  and  any  judgment  or  decree  therein  shall 

15  be  subject  to  review  by  writ  of  error  or  appeal  as  provided 

16  by  law  in  other  cases. 

17  Sec  20.    That  the  lands  leased  under  this  Act  may  be 

18  used  and  the  works  constructed,  maintained,  and  operated 

19  thereon   may  be   used,  added  to,  or  enlarged  by  the  lessee 

20  or  any  other  person,  association,  or  corporation,  for  the  pur- 

21  pose  of   impounding  and  conveying    water    for    irrigation, 

22  mining,   municipal,  domestic,  and  other  beneficial  purposes, 

23  whenever  such   use  of  the  water  is  authorized  by  the  State 

24  wherein  said  project  is  situated:  Provided,  however.   That 

25  if  said  lands  and   works  are  so   used  by  any  other  than   tJie 


17 

1  lessee,  such  use  must  be  without  expense  or  damage  to  the 

2  said  lessee. 

Passed  the  House  of  Representatives  August  24,  1914. 
Attest :  SOUTH  TRIMBLE, 

Clerk. 


APPENDIX    E 


63d  CONGRESS,      ^         a7|a 
3d  Session.  0»      D  /    I  A 


IN  THE  SENATE  OF  THE  UNITED  STATES. 

December  7,  1914. 

Mr.  Jones  introduced  the  following  bill,  which  was  read  twice 

and  referred  to  the  Committee  on  Public  Lands. 


A  BILL 

To  aid  and   to  regulate   the  development,   operation,  and  main- 
tenance of  water  powers  on  lands  of  the  United  States,  and 
for  other  purposes. 
1  fit   it  enacted  by  the  Senate  and  House  of  Representa- 

'2     tines  of  the  United  States  of  America  in  Congress  assembled, 

3  That   in   order  to  utilize  for  the  benefit  of  the  public  the 

4  water-power   resources  dependent   in   whole  or  in   part   for 

5  their   proper  development    upon   the  use  of  public   lands  of 

6  the    United    States    (including   Alaska),    and     in    order    to 

7  prevent  the  unregulated  monopoly  of  said  water  powers,  and 

8  for  the  purpose    of    developing,    generating,    transmitting, 
(.»     ami    utilizing   hydroelectric   power,   the   right   to  construct, 


(12) 


1  develop,  maintain,  and  operate  dams,  reservoirs,  canals,  con- 

2  (Inits,  pipe  lines,  tunnels,  water-power  or  hydroelectric  plants, 

3  transmission  and  distributing  lines,  and  all  other  appurtenant 

4  constructions,  structures,  and  appliances  necessary  or  con- 

5  venient  for  the  development,  generation,   transmission,  and 

6  utilization    of    hydroelectric    power    on,    over,    under,    and 

7  across  any  part  of  the  public   lands   of  the  United   States 

8  (including   Alaska),   reserved   or   unreserved,   including  na- 

9  tional  forests,  national  monuments,  and  Indian  reservations, 

10  is  hereby  granted,  upon  compliance  with  the  conditions  here- 

11  inafter    imposed,    to    any    State    or    municipal    subdivision 

12  thereof  or  to  any  mutual  or  public-service  corporation  or- 

13  ganized  for  the  purpose,  or  to  any  person  or  persons  author- 

14  ized  by  the  State  or  States  in   which  any  portion  of  such 

15  dam,  storage    reservoir,  water-power  or  hydroelectric  plant, 

16  or    transmission    or    distributing    lines    may    be    located,    to 

17  engage  in  the  business  of  furnishing  water  for  domestic  uses, 

18  irrigation,   transportation,   or  any   other   purpose,   or   light, 

19  heat,   power,   or  energy  generated   by  electricity    or    other- 

20  wise:  Provided,  That  the  State  in  which  such  lands  may  be 

21  located  shall  have  provided  for  the  regulation  and  control  of 

22  mutual  and   public-service  corporations  and  persons  engag- 

23  ing  in   such   business.      Such    State,    municipal   subdivision, 

24  mutual  or  public-service  corporation,  person  or  persons  is 

25  hereinafter  referred  to  as  the  ''grantee."1 


1  Sec.    2.     That   any   grantee   hereunder   may   construct, 

2  develop,    maintain,    and    operate    dams,    reservoirs,    canals, 

3  conduits,   pipe  lines,   tunnels,   water-power  or  hydroelectric 

4  plants,  transmission  and  distributing  lines,  and  all  other  ap- 

5  purtenant   structures  and  appliances  on,   over,   under,   and 

6  across  any  part  of  the  public  lands  of  the  United  States  (in- 

7  eluding  Alaska),  reserved  or  unreserved,  including  national 

8  forests,  national  monuments,  and  Indian  reservations,  upon 

9  filing  with  the  Secretary  of  the  department  having  jurisdic- 

10  tion  over  such  lands  proof  of  its  right  to  the  use  of  water 

11  and  plans  and  specifications  for  such  works,  together  with 

12  such  drawings  of  the  proposed  construction  and  such  map  of 

13  the  proposed  location  and  flooded  area  as  may  be  required 

14  for  a  full  understanding  of  the  subject,  which  plans,  speci- 

15  fications  and  drawings  shall  be  approved  by  such  Secretary 

16  if  it  appears  to  him  that  the  proposed  development  will  pro- 

17  mote  the  highest  and  greatest  practicable  use  of  the  water 

18  resources  involved.     Within  ninety  days  after  the  approval 

19  of  such  plans,  specifications,  and  drawings  said  grantee  and 

20  such  Secretary  shall  agree  upon  the  then  fair  market  value 

21  of  the  lands  proposed  to  be  occupied   which  are  owned  or 

22  controlled   by  the  United   States,  and   in   the  event   of  their 

23  failure  to  agree  within   such   time,  then  such  grantee  shall 

24  have  the  right   to,  and   may,   begin    proceedings   in    the  dis- 

25  trict    court    of   the    railed    Stales    for   the  district    in    which 


1  such   lauds  or  any  part   thereof    aiay    be    located    for    the 

2  purpose  of  determining  the  then  fair  market  value  thereof. 

3  Such  district  court  is  hereby  given  jurisdiction  of  said  pro- 

4  ceedings    for    such    purpose,    and    service    of    process    may 

5  be    had    upon    the    clerk    of    said    court,    and    upon    such 
(i  service    being   made    the   Attorney    General    of    the    United 

7  States  shall  enter  his  appearance    for    the    United    States. 

8  Such  proceedings  shall  be  conducted  according  to  the  laws 

9  and  rules  in  force  in  said  jurisdiction  at  said  time  for  the 

10  exercise  of  the  right  of  eminent    domain    for    public    pur- 

11  poses,  with  the  right  of  appeal  as  in  other  cases.       Upon 

12  an   agreement   being   reached   as  to   the   fair   market  value 

13  of  said   land   between   said   Secretary  and   the   grantee,   or 
11  in    the    event    of    their    failure    to    agree,    then    upon    the 

15  final   adjudication   of   the   value   of   said   land    the   grantee 

16  shall    have    the    right    to    occupy    the    same    for    the    pur- 

17  poses    above    set    forth    for    a    period    of    fifty    years    after 

18  such  agreement  or  final  adjudication,  and  after  the  expira- 

19  tion  of  said  period  of  fifty  years  such  right  shall  continue 

20  until  terminated    and    compensation  has  been  made  to  the 

21  grantee   for  the  fair  value  of  its  property,  as  herein   pro- 

22  vided.     During  the  occupancy  of  said  land  by  the  grantee 

23  it   shall    pay   into   the   Treasury   of   the   United   States   an- 

24  nually,    in    advance,    a    sum    equal    to    five    per    centum 

25  upon    the    fair    market    value    of    such    land    as    so    deter- 


1  mined    by    agreement  or  final  adjudication,    and    the    lia- 

2  bilitv  for  such  payment  shall  constitute  a  preferred  claim 

3  against  all  the  assets  of  the  grantee  and  may  be  collected  by 

4  suit  brought  in  the  name  of  the  United  States,  and  in  the 

5  event  of  the  failure  of  the  grantee  to  pay  any  judgment  and 

6  costs  recovered  in  such  suit,  then  such  judgment  may  provide 

7  for  ejecting   said  grantee   from   said   premises  and   for   the 

8  forfeiture  of  the  grant. 

9  Sec.  3.  That  in  the  acquisition  of  the  property  of  the 

10  grantee,  as  hereinafter  provided,  no  value  shall  be  claimed 

11  by  or  allowed  to  the  grantee  for  the  use  of  or  the  right  to 

12  use  the  lands  acquired  under  the  terms  of  this  Act. 

13  Sec.  4.  That  where  the  public  interest  requires  or  jus- 

14  titles  the  execution  by  the  grantee  of  contracts  for  the  sale 

15  and  delivery  of  electrical  energy  for  periods  extending  be- 
lli yond  the  fifty-year  period  herein  named,  such  contracts  may 
17  be  entered  into  upon  the  approval  of  the  Public  Service  Com- 
1S  mission  or  similar  authority  in  the  State  in  which  the  sale 

19  or  delivery  of  power   is  made1,  or  if  sol<l   or  delivered   in  a 

20  Territory,   then    upon    the  approval   of   the  authority  under 

21  which  the  grant  is  made,  and  thereafter,  in  the  event  of  the 

22  termination  of  the  grant  as  herein  provided,  the  United  States 

23  or  any  subsequent  grantee  shall  assume  and  fulfill  all  such 

24  contracts  entered  into  by  (he  original  grantee. 


1  Sec.   5.   That  Congress  may,  at  any  time,  provide  for 

2  the  termination  of  the  righl  to  occupy  such  land  upon  the 

3  expiration  of  said  fifty-year  period,  or  at  any  time  there- 

4  after,  and  provide  for  the  disposition  of  all  the  property  of 

5  the  grantee  dependent  for  its  success  upon  the  rights  hereby 

6  granted,  which  shall  include  the  necessary  appurtenant  prop- 

7  erty  created  or  acquired  and  valuable  or  serviceable  in  the 
S  distribution  of  water  or  in  the  generation,  transmission,  or 
9  distribution  of  light,  heat,  power,  or  energy,  upon  the  pay- 

10  ment  of  fair  compensation  and  upon  the  assumption  of  all 

11  contracts  entered  into  by  said  grantee  which  have  the  ap- 

12  proval  of  the  duly  constituted  public  authority  having  juris- 

13  diction  thereof. 

14  Sec.   6.    That  in  order  to  prevent  tying  up,  for  speeu- 

15  lative  purposes,  any  of  the  lands  to  be  acquired  under  this 

16  Act,   the  grantee  shall   commence  the  construction    of    the 
IT  project  within  two  years  from  the  date  of  the  agreement,  or 

18  in  the  event  of  failure  to  agree  then  upon  the  date  of  final 

19  adjudication,   as   to  the  value  of  the  land   to   be  occupied, 

20  and  shall  thereafter,  in  good   faith,  continuously,  and  with 

21  due  diligence,  prosecute  such  construction,  and  shall  within 

22  the  further  term  of  five  years  complete  and  put  in  commer- 

23  cial  operation  such  part  of  the  ultimate  development  as  the 

24  Secretary  or  Secretaries  of  the  department  or  departments 

25  then  having  jurisdiction  over  such  lands  shall  deem  necessary 


1  to  supply  the  reasonable  needs  of  the  then  available  market, 

2  and  shall  from  time  to  time  thereafter  construct  such  por- 

3  tion  of  the  balance  of  such  ultimate  development  as  said 

4  Secretary  or   Secretaries   may   direct  and   within   the   time 

5  specified  by  said  Secretary  or  Secretaries,  so  as  to  supply 

6  adequately  the  reasonable  market  demands  until  such  ulti- 

7  mate  development  shall  be  completed,  and  no  extensions  of 

8  the  periods  herein  specified  shall  be  granted  except  by  the 

9  President,  and  then  only  when,  in  his  judgment,  the  public 

10  interest  will  be  promoted  thereby. 

11  Sec.   7.  That  rates  charged  by  all  grantees  under  this 

12  Act  shall  be  reasonable  and  the  service  and  operation  shall 

13  be  adequate  and  efficient,  and  all  such  grantees    shall    be 

14  subject    to    lawful   regulation   in   the  public   interest  as  to 

15  rates  and  otherwise  by  the  respective  States   having  juris- 

16  diction  thereof:  Provided,  however,  That  the  United  States 

17  reserves  the  right  to  regulate  rates  and  service  to  the  con- 

18  suiner  to  the  extent  that  the  business  of  the  grantee  may  be 
1!)  or  shall  become  interstate. 

20  SEC.   S.   That  the  provisions  of  this  Act  shall  apply  to 

21  all  grantees  herein  designated   who,  under  existing  laws  or 

22  by    the   terms   of  an    agreement     or    agreements    heretofore 

23  entered    into   with    the   Department   of  the   Interior  or   the 

24  Department  of  Agriculture,  may  have  constructed,  or  have 
2.~>  under  construction,  dams,  reservoirs,  canals,  conduits,  pipe 


8 

1  lines,    tunnels,    water-power   or   hydroelectric   plants,    trans- 

2  mission  or  distributing  lines,  and  appurtenant  structures  and 

3  appliances,  on,  over,  under,  or  across  any  part  of  the  public 
1  lands  of  the  United  States,  reserved  or  unreserved,  as  defined 

5  in  section  one  of  this  Act,  and  said  grantee  shall  have  the 

6  right  to  have  the  then  fair  market  value  of  the  lands  so  occu- 

7  pied  and  used  determined,  as  in  said  section  two  provided, 

8  and  shall  thereupon  be  entitled  to  all  the  rights,  privileges, 

9  and  benefits  of  this  Act,  and  subject  to  its  terms  and  pro- 

10  visions.     Upon  a  determination  of  the  fair  market  value  of 

11  said  land,  by  and  between  the  Secretary  of  the  department 

12  having  jurisdiction  over  such  lands  and  the  grantee,  or,  in 

13  the  event  of  their  failure  to  agree,  then  upon  the  final  adjudi- 
11  cation  of  the  value  of  said  lands,  as  provided  in  section  two 
15  of  this  Act,  and  upon  such  modification  of  its  plans  and  speci- 
1G  fications  for  development  as  the  Secretary  may  deem  neces- 
17  sary  to  promote  by  such  proposed  development  the  highest 
IS  and  greatest  practical  use  of  the  water  resources  involved, 

19  such  grantee  shall  have  the  right  to  ask,  demand,  and  receive 

20  the  cancellation  of  any  and  all  agreements  theretofore  made 

21  with  the  Department  of  the  Interior  or  the  Department  of 

22  Agriculture  having  reference  to  any  of  the  rights  of  way  or 

23  lands  of  the  United  States  so  occupied  or  used,  and  upon 

24  the  payment  by  said  grantee  into  the  Treasury  of  the  United 

25  States  of  the  first  annual  payment  for  the  use  of  said  lands, 


9 

1  as  herein  provided,  all  such  agreement  or  agreements  shall 

2  be  canceled  and  annulled  and  be  of  no  further  force  or  effect. 

3  Sec.  9.    That  all  water-power  reserves    may    be    opened 
1  by  the  President  to  location,  settlement,  entry,  and  disposal 

5  under  the  appropriate  public-land  laws,  so  far  as  the  same 

6  will  not  impair,  prejudice,  or  destroy  the  use  of  the  land  for 

7  water-power     development,     generation,      transmission,      or 

8  utilization,  it  being  the  intent  of  this  section  that  so  far  as 

9  possible  lands  available  and  necessary  for  water  power  and 

10  for  other  purposes  shall  be  used  for  all  purposes,  the  water 

11  power,  however,  being  the  dominant  use,  which  reservation 

12  shall  be  expressed  in  all  patents  issued  for  such  land. 

13  Sec.  10.  That  the  works  constructed  and  maintained 
11  under  authority  of  this  Act  shall  not  be  owned,  leased, 
15  trusteed,  possessed,  or  controlled  by  any  device  or  in  any 
1G  manner  so  that  they  form  a  part  of  or  in  any  way  affect  any 

17  combination  in  the  form  of  an  unlawful  trust,  or  form  the 

18  subject  of  any  contract  or  conspiracy  to  limit  the  output  of 

19  electric  energy  or  in  restraint  of  trade  with  foreign  nations 

20  or  between  two  or  more  States  or  Territories  in  the  genera- 

21  tion,  sale,  or  distribution  of  electric  energy. 

22  Sec    11.    That    any    grant    made    hereunder    may    be 

23  forfeited  ami  canceled  before  the  expiration  of  tin1  fifty-year 

24  period  herein  named,  by  appropriate  proceedings  in  a  court 

S.  6712 2 


10 

1  of  competenl  jurisdiction,  whenever  the  grantee  shall  fail  to 

2  comply  with  the  terms  of  this  Act. 

3  SEC.    12.   That  the  Secretary  having  control  and  juris- 

4  diction  over  any  lands  subject  to  the  provisions  of  this  Act 

5  may  make  such  rules  and  regulations  as  may  be  necessary 

6  and  proper  for  the  purpose  of  carrying  out  the  provisions 

7  of  this  Act   in  relation  to  the  lands  under  his  control  and 

8  jurisdiction. 

9  Sec.  13.    That  the  provisions  of  section  one  of  this  Act 

10  defining  the  qualifications  necessary  for  a  grantee  hereunder 

11  shall   not  apply  to  any  water-power  developments   or  pro- 

12  posals  for  development  of  a  capacity  of  one  thousand  horse- 

13  power  or  less,  and  in  such  cases  the  benefits  of  this  Act  shall 

14  extend  to  any  person,  corporation,  or  association  of  persons 

15  which  shall  comply  with  the  other  terms  and  requirements 
10  hereof. 

17  Sec.   14.    That  all  Acts  and  parts  of  Acts  inconsistent 

18  with   this  Act  are  hereby  repealed,  and  the  right  to  alter, 
1!)  amend,   or   repeal   this   Act    is   hereby    expressly    reserved: 

20  Provided,  That  in  case  any  grantee  hereunder  shall,  at  the 

21  time  of  such  alteration,  amendment,  or  repeal,  have  exercised 

22  rights  in  accordance  with  this  Act,  such  rights  and  property 

23  used    thereunder  shall   be  deemed   property   rights   of  such 

24  grantee,  of  which  such  grantee  shall  not  until  the  time  herein 


11 

1  fixed  for  termination  be  deprived  by  such  alteration,  amend- 

2  ment,  or  repeal,  and  then  only  upon  the  conditions  provided 

3  in  case  of  termination  by  section  five  of  this  Act. 


APPENDIX    F 


63d  CONGRESS,      q         *7  A  T  1 
3d  Session.  ^5«       /  \J  / 


IN  THE  SENATE  OF  THE  UNITED  STATES. 

December  29,  1914. 

Mr.  Works  introduced  the  following  bill;  which  was  read  twice 

and  referred  to  the  Committee  on  Public  Lands. 


A  BILL 

To  provide  for  the  disposition  of  the  public  lands  for  the  supply 
of  water  for  irrigation  and  the  generation  of  power. 

1  Be  it  enacted  by  the  Senate  and  House  of  Representa- 

2  tives  of  the  United  States  of  America  in  Congress  assembled, 

3  That  subject   to  the  limitation  and   provisions  in  this  Act 

4  contained,  the  right  of  way  is  hereby  granted  to  construct, 

5  develop,  maintain,  and  operate  all  necessary  or  convenient 

6  dams,  reservoirs,  canals,  conduits,  pipe  lines,  tunnels,  trans- 

7  mission  lines,  roads,  power  houses,  and  all  other  works  or 

8  structures  necessary  or  convenient  for  the  appropriation  and 

9  beneficial  use  of  water    and    the    power  or  other  products 

10  generated  thereby  and  for  the  utilization  and  beneficial  use 

11  of   the   same   on,   over,    under,   and    across   any   part   of   the 


2 

1  public   hinds  of  the   United   States    (including  Alaska)    re- 

2  served    or   unreserved,    including   national    forests,    national 

3  monuments,  and  Indian  reservations,  to  any  State  or  munici- 

4  pal  subdivision   thereof,  or  to  any  mutual  or  public-service 

5  corporation  organized  for  the  purpose  or  to  any  person  or 

6  persons   authorized    by   the   State   or   States   in   which   any 

7  portion  of  such  works,  structures,  or  appurtenances  are  situ- 

8  ated  :  Provided,  That  as  to  any  such  rights  or  uses  that  are 

9  located  within  any  national  monuments  or  Indian  reserva- 

10  tions  the  same  shall  be  located  subject  to  the  approval  of  and 

11  under  the  direction  of  the  Secretary  of  the  Interior,  and  in 

12  such  a  way  as  not  to  interfere  with  said  national  monuments 

13  or  Indian  reservations  or  the  uses  or  purposes  for  which  the 
11  same  are  created. 

15  Sec  2.  That  any  applicant  for  a  grant  hereunder  may 

16  file  with  the  Secretary  of  the  Interior,  or  of  the  department 

17  having  jurisdiction  of  such  lands,  proof  of  his  right  to  the 

18  appropriation  or  use  of  water,  together  with  plans  and  speci- 

19  flcations  for  such  works,  together  with  such  maps  and  draw- 

20  ings  of  the  proposed  canals,  works,    reservoirs,    and    other 

21  structures  as  may  be  required  for  the  full  understanding  of 

22  the  same,  which  plans  and  specifications  and  drawings  shall 

23  be  approved  by  the   Secretary,   subject  to  the  laws  of  the 

24  State  with  respect  to  and  controlling  the  appropriation  and 

25  beneficial  use  of  water  for  the  purposes  for  which  the  same 


1  is    being    appropriated.      If    said    proposed    canals,    works, 

2  reservoirs,  or  other  structures  are  located  within  any  national 

3  monument  or  Indian  reservation,  no  work  upon  or  in  con- 

4  nectiou   therewith   shall   be   commenced   or   proceeded   with 

5  until  the  location  of  the  same  is  approved  by  the  Secretary 

6  of  the  department  having-  jurisdiction    thereof,    as    herein- 

7  before  in  this  Act  provided,  and,  if  within  a  forest  reserve, 

8  inav  be  required  to  be  so  located  as  not  unnecessarilv  to 

9  interfere  with  the  purposes  for  which  such  reserve  is  created : 

10  Provided,  That  no  grant  shall  be  made  under  this  Act  until 

11  the  applicant  shall  have  obtained  and  tiled  with  the  officer 

12  to  whom  the  application  is  made  a  certificate  from  the  State 

13  board,  commission,  or  other  body  or  officer  having  jurisdic- 

14  tion  over  the  use  of  the  waters  of  the  streams  of  the  State 

15  that  such  applicant  has  the  lawful  right  to  divert  and  use  the 

16  water    for    the    purpose  or  purposes  for  which  the  applica- 

17  tion  is  made.     If  no  such  body  or  officer  exists  in  any  State, 

18  then  the  officer  to  whom  such  application  is  made  shall,  in 

19  case  of  conflict,  make  the  grant  to  the  person  having  the 

20  legal  right  to  the  use  of  the  water:  Provided  further,  That 

21  within  ninety  days  after  the  approval  of  such  plans,  speci- 

22  fications,  and  drawings  said  grantee  and  said  Secretary  shall 

23  agree  upon  the  then  fair  market  value  of  the  lands  proposed 

24  to  be  occupied  or  used  and  which  are  owned  <>r  controlled 

25  by  the  United   States;  and,   in   the  event   of  their  failure  to 


1  agree  within  such   time,   (hen   such  grantee  shall   have  the 

2  right  to  and  may  bring  proceedings  in  the  district  court  of 

3  the  United   Stales  for  the  district  in   which  such  lands  are 

4  situated,  or  in   which  any  part  thereof  may  be  located,  for 

5  the    purpose    of    determining    the    then    fair    market    value 

6  thereof.     Such  district  court  is  hereby  given  jurisdiction  of 

7  such  proceedings  for  such  purpose  and  service  of  process  may 
S  be  had  on  the  clerk  of  said  court,  and,  upon  service  being 
9  made  and  within  thirty  days  thereafter,  the  Attorney  General 

10  of  the   United   States  shall   enter   his  appearance    for    the 

11  United   States.     Such  proceedings    shall    be    conducted  ac- 

12  cording  to  the  laws  and  rules  in  force  in  such  jurisdiction 

13  at  such  time  for  the  exercise  of  the  right  of  eminent  domain 

14  for  public  purposes,  with   the  right  of  appeal  as  in  other 

15  cases.     Upon  an  agreement  being  reached    as    to    the    fair 

16  market  value  of  said  land  between  said   Secretary  and  the 

17  grantee,  or,  in  the  event  of  failure  so  to  agree,  then  upon 

18  the  bringing  of  such  action  in  said  court  of  the  United  States 
10  and   upon   the  giving  of  a  sufficient  bond   by   the  grantee, 

20  required  and  conditioned  upon  his  complying  with  the  order 

21  and  judgment  of  the  court  and  approved  by  the  court,  or 

22  upon  the  final  adjudication  of  the  value  of  said  land,  the 

23  grantee   shall   have   the   right   to   occupy   the   same   for   the 

24  purposes  above  set  forth  so  long  as  and  during  such  period 

25  or  periods  of  time  thereafter  as  the  said   grantee,  its  sue- 


1  cessors  or  assigns,  shall  be  possessed  of  the  right  of  appro- 

2  priation  and  beneficial  use  of  the  waters  appropriated  and 

3  used  in  connection  with  said  rights  of  way:  And  provided 

4  further,  That  if,  and  whenever,  the  right  of  appropriation 

5  and  beneficial  use  of  said  waters  and  the  right  to  use  and 

6  enjoy  the  products   thereof   shall   be  assigned,   transferred, 

7  conveyed,  forfeited  to,  or  vested  in  any  other  corporation  or 

8  person  or  State  or  municipal  subdivision  thereof,  then  and 

9  thereupon  the  rights  of  way  and  all  of  the  rights  and  privi- 

10  leges  hereby  granted  to  the  grantee  shall  belong  to  and  shall 

11  be  vested  in  such  successor  in  interest  or  right  of  the  grantee 

12  or  its  successors  or  assigns,  so  that  said  right  of  way  shall 

13  continue  with,  appertain  to,  and  shall  be  used  and  enjoyed 

14  only  by  the  grantee  or  its  successors  in  interest,  or  in  any 

15  State  or  municipal  subdivision  thereof  having  the  right  or 
lfi  being  charged  with  the  duty  of  appropriation  and  beneficial 

17  use  of  the  waters  diverted  and  used  in  connection  with  the 

18  rights  of  way  so  granted,  and  having  the  right  to  engage  in 

19  ami  being  charged  with  the  duty  of  carrying  on  the  service 

20  connected  with  the  appropriation  ami  beneficial  use  of  said 

21  water  or  the  electric  power  or  products  generated   thereby 

22  or  produced  therefrom. 

23  SEC.   3.    That   in    arriving  at    (lie    fail-   market    value  of 

21  such  land  the  parties,  or,  in  case  of  disagreement,  the  court, 

25  shall   take  into  account  the  enhanced   value  of  said   land   for 
(13) 


1  power    planl     or    reservoir    or    other    special     purpose    or 

2  purposes. 

3  Sec.   4.    That   in   the  event    of    the    acquisition   of  the 

4  property   of   the  grantee,    including   or   ^onneried    with   the 
.-»  rights   and   privileges   obtained    under    this   Act,   under   the 

6  authority  of  the  United  States,  or  by  or  under  the  authority 

7  of  any  Stale  or  municipal  subdivision  thereof,  the  grantee 

8  shall  not  be  entitled   to  claim  or  receive  any  compensation 

9  or  value  or  in  connection  with  any  of  the  rights  obtained  or 

10  used   under  the  provisions  of  this   Act.       And    the  grantee 

11  and   its  successors  in   interesi    shall    nor   be  entitled,  in  the 

12  fixing-  of  any  rates  by  competent    public    authority,    or    by 

13  any  State  or  legal   subdivision   thereof,   to   have  or  receive 

14  any  allowance  or  earnings  on  account  of  any  of  the  rights, 

15  uses,    or    privileges    granted    or    received    under    this    Act, 

16  except  such  amounts,  if  any.  as  have  been  paid  for  the  uses 

17  and  privileges  hereby  granted  and  allowed. 

18  Sec.  5.  That  the  grantee  shall  commence  the  construc- 
1!>  tion  of  the  proposed   works  within   one  yi-jv  from  the  date 

20  of  the  agreement  or  final  adjudication,  or  the  approval  of 

21  the  bomb  as  in  this  Act  provided  for,  and  shall  thereafter, 

22  in  good  faith,  continuously  and  with  due  diligence  prosecute 

23  such  construction,  and  shall  within  the  further  term  of  five 

24  years  complete  and   put   in   commercial    operation   such   de- 
2.")  velopment   or  such   substantial    pari    or   portion   thereof,  as 


1  the  public  needs  shall  demand,  and  shall  complete  and  put 

2  in  operation  said  entire  development  with  due  and  reason- 

3  able  diligence:  Provided,  That  the  rights  of  such  grantee, 

4  its  successors  or  assigns,  shall  not  be  forfeited  or  terminated 

5  so   long  as  the  grantee,   his   successors   or   assigns,   remain 
G  vested  with  the  right  or  duty  to  appropriate  and  beneficially 

7  use  the  waters  or  products  thereof  to  be  appropriated  and 

8  used  upon   or  in   connection   with   said  rights  of  way  and 

9  shall  be  duly  and  reasonably  exercising  that  right  and  dut  v  : 

10  Provided,  hoioever,  That  whenever  the  rights  of  the  grantee, 

11  its  successors  or  assigns,  are  lost,  forfeited,  or  transferred 

12  so  that  the  water  or  the  products  thereof  can  not  be  appro- 

13  priated  or  used  upon  or  in  connection  with  said  rights  of 

14  way,  then  ami  thereupon  such  rights  of  way  or  the  parts  or 

15  portions  thereof  which  can  not  be  so  used  or  enjoyed  shall 

16  revert   to  ami  be  revested  in  the  Government  of  the  United 

17  Slates,   or  in   the  successor  in   interest   of   the  said   grantee 
is  entitled   to  and   having  the   right  to  appropriate  or  bene- 

19  finally     use    said     waters    or    the     products     thereof:     Pro- 

20  ritlcd   farther,   That   whenever   the  right   to   use   the   waters 

21  of  the  stream  for  the  purposes  of  the  grant  shall  be  forfeited 
L'l'  or   otherwise    terminated    by   the    State   wherein    the   land    is 

23  situated  or  by  final  adjudication  of  the  courts,  then  all  the 

24  rights  under   the  grant   shall    cease  and    terminate  and    the 

25  hind  revert  to  the  I'nited  States. 


1  Sec.  6.    That  the  rates  and  service  of  the  grantee,  its 

2  successors  and  assigns,   shall    be   subject    to   regulation   and 

3  control  under  the  Constitution  and  laws  of  the  United  States 

4  and  under  the  constitution  and  laws  of  the  State  or  States 

5  within    which    the   same  are   situated   or   used,   and,    in   the 
<»  event  of  forfeiture  of  any  of  the  rights,  privileges,  or  prop- 

7  erties  of  the  grantee,  its  successors  or  assigns,  by  reason  or  on 

8  account  of  the  violation  of  any  law  of  the  United  States  or 
!>  of  any  State,  the  rights  hereby  granted  shall   be  forfeited 

10  therewith  and  shall  revert  to  or  be  vested  in  the  State  or 

11  States,  or  municipal  subdivisions  thereof,  or  corporations  or 

12  person  or  persons  in  whom  the  right  or  duty  of  appropria- 

13  tion  and  beneficial  use  of  said  waters  or  the  products  thereof 
11  shall  be  vested,  and,  in  such  event,  without  compensation  to 

15  the  grantee,  its  successors,  or  assigns,  for  or  in  connection 

16  with  any  of  the  rights,  uses,  or  privileges  obtained,  granted, 

17  or  received  under  this  Act. 

18  Sec.    7.     That   rates  and   charges   for   power,   or   water 
10  furnished  for  irrigation  or  other  use,  shall  be  fixed  and  de- 

20  termined  by  the  State  in  which  the  same  is  supplied:  Pro- 

21  uided,  That  where  the  power  plant  or  reservoir  site  acquired 

22  under  this  Act  is  in  one  State  and  power  or  water  is  supplied 

23  in  another  State  any  person  supplied  therewith  in  the  latter 

24  State  may  apply  to  the   Interstate  Commerce  Commission, 


1  or  other  body  authorized  by  Act  of  Congress,  to  fix  such 

2  rates  and  charges  for  power  or  water  supplied  in  such  State. 

3  Sec.  8.   That   any  qualified  grantee  or  grantees  under 

4  the    terms    of    this    Act    engaged  in  the  appropriation  and 

5  beneficial  use  of  water  or  the  products  thereof,  as  in  this  Act 

6  set  forth   under  revocable  permits  or  otherwise  may  come 

7  under  and   avail   themselves   of   the  privileges   of  this   Act 

8  upon  application  to  the  head  of  the  department  having  juris- 

9  diction   of  the  administration  of  this  Act  and,   upon   such 

10  application  and  the  filing  of  the  required  plans,  speeifica- 

11  tions,  maps,  and  other  data  required,  such  qualified  grantee 

12  shall  come  under  and  have  and  enjoy  and  be  subject  to  all 

13  of  the  terms,  rights,  grants,  conditions,  limitations,  and  pro- 

14  visions  of  this  Act,  upon  compliance  with  its  terms,  as  herein 

15  provided:  Provided,  That  if  any  of  its  works  or  structures 
1G  are  in  course  of  construction,  or  completion,  at  the  time  of 

17  so  coming  under  the  provisions  of  this  Act,  the  same  shall 

18  be  considered  completed,  used,  operated,  and  enjoyed  wholly 

19  under  and  in  accordance  with  the  terms  and  provisions  and 

20  limitations  of  this  Act  and  as  though  originally  authorized, 

21  granted,  and  constructed  hereunder,  and  such  grantee  shall 

22  and   may  have  the  value  of  the  rights  and  properties  used 

23  and   enjoyed   under  the   terms  of   this   Act    agreed    upon   or 

24  adjudicated  and  valued  as  in  this  Act  provided,  and   there- 

S.  7071 2 


LO 

1  after  shall  make  payments  to  the  Government  of  the  United 

2  Slates  in  accordance  with  the  terms  of  this  Act:  Provided, 

3  also,  Thai   in   the  event  of  the  rights  and  privileges  of  the 
1  grantee  in  connection  with  any  existing  uses  or  permits  being 

5  brought  under  this  Act,  thereupon  and  in  connection  there- 

6  with  all  of  the  other  existing  permits,  rights,  privileges,  or 

7  claims  of  the  grantee  as  to  the  rights  and  property  so  brought 

8  under  this  Act  shall  be  surrendered,  canceled,  nullified,  and 

9  at  an  end,  and  the  sole  rights  of  the  United  States  and  the 

10  grantee  as  to  such  property  shall  be  under  and  in  accordance 

11  with  this  Act. 

12  Sec.  9.    That   the    Secretary   of   the   Interior,    or   other 

13  Secretary  having  jurisdiction  and  control  over  any  lands  sub- 
11  jeet  to  the  provisions  of  this  Act,  shall  make  such  rules  and 

15  regulations  as  may  be  necessary  and  appropriate  and  for  the 

16  purposes  of  and  having  the  effect  of  carrying  out  the  provi- 

17  sions  of  this  Act. 

18  Sec.  10.    That  the  rights  and  privileges  herein  granted 

19  may    be    transferred,    assigned,    conveyed,    mortgaged,    or 

20  otherwise  disposed  of  by  the  grantee,  but  only  under  and  in 

21  accordance  with  and  subject  to  the  provisions  of  this  Act 

22  and  under  and  in  accordance  with  the  laws  of  the  United 

23  States  and  of  any  State  or  States  within  which   such  said 

24  works  arc  situated  and  any  assignee  or  successor  in  interest 


11 

1  of  the  grantee  hereunder  shall  be  subject  to  all  of  the  terms 

2  and  conditions  of  this  Act  and  to  the  laws  of  the  United 

3  States  and  of  the  State  or  States  within  which  said  property 

4  or  works  are  situated  in  all  respects  and  to  the  same  extent 

5  as  the  original  grantee  hereunder. 

6  Sec.  11.  Thar  the  United  States  shall  at  all  times  have 

7  the  right  to  reserve,  sell,  assign,  lease,  trausfer,  or  otherwise 

8  dispose  of  all  or  any  part  of  the  lands  or  the  products  thereof 

9  upon,   over,   or   in   connection   with  which   the  rights,  privi- 

10  leges,  structures,  and  uses  hereunder  provided  for  are  situ- 

11  ated,  subjed   to  all  of  tin-  rights  of  way,  uses,  occupancies, 

12  and  privileges  hereunder  granted,  including  the  right  to  all 

13  necessary  means  of  ingress  and   egress  used   or  reasonably 

14  required  in  the  use  and  enjoyment  of  the  rights  and  privileges 
1.")  granted  hereunder. 

16  Sec.    12.    That   nothing   in   this  Act   shall   he  construed 

17  as  affecting  or  intended  to  affect,  or  to  in  any  way  interfere 

18  wiili  ili<-  laws  of  any  State  relating  to  the  control,  appropri- 
1!)  ation,  use,  or  distribution  of  water. 

20  Sec.    13.    Thai    all   Arts  and  parts  of  Acts  inconsistent 

21  with  this  Ad   are  hereby  repealed,  and   the  right  to  alter, 

22  amend,  or  repeal  this  Act  is  hereby  expressly  reserved: 
2.".  /'roriiJt  tl.  That  in  case  any  grantee  hereunder  shall,  al  the 
21  lime  of  such  alteration,  amendment,  or  repeal,  have  exercised 
25  rights  in  accordance  with  this  Act,  such  rights  and  property 


12 

1  used   thereunder  shall   be  deemed  property  rights  of  such 

i*  grantee,  of  which  such  grantee  shall  not  be  deprived  by  such 

3  alteration,   amendment,   or  repeal,   and   only  upon   the  con- 

4  ditions  provided  in  this  Act. 


APPENDIX   G 


63d  CONGRESS,      ^         *7  1  A  1 
3i>  Session.  0«       /  1  \)  1 


IN  THE  SENATE  OF  THE  UNITED  STATES. 

December  29  (calendar  day,  December  31),  1914. 

Mr.  Smoot  introduced  the  following-  bill;  which  was  read  twice 

and  referred  to  the  Committee  on  Public  Lands. 


A  BILL 

Providing  for  the  acquisition  by  a  State,  under  certain  conditions, 
of  any  lands  therein  which  are  or  may  become  chiefly  valu- 
able for  the  development  of  water  power. 

1  Be  it  enacted  by  the  Senate  and   House  of  Bcprcsenta- 

2  tives  of  the  United  States  of  America  in  Congress  assembled, 

3  That  in  the  manner  and  subject  to  the  limitations  herein  pre- 

4  scribed,  a  State  may  enter  and  acquire  title  to  lands  within 
."  said  State  which  are  or  may  become  chiefly  valuable  for  the 

6  development  of  water  power. 

7  Sec.  2.  That  any  State  desiring  to  avail  itself  of  the  pro- 

8  visions  of  this  act    shall    make  application    therefor   in   the 
!t     manner  following : 


2 

1  Such  State  shall,  through  its  regularly  created  board, 

2  commission,  or  other  regularly  constituted  public  authority 

3  of  said   State  duly  vested  with   the  power  to  regulate  and 

4  control  the  rates  and  service  of  public  utility  corporations, 

5  including  authority  to  regulate  the  rates  and  service  of  any 

6  person,    persons,    associations,    or   corporations   engaged    in 

7  the  business  of  developing,  distributing,  furnishing,  selling, 

8  and  renting  electric  power,  file  with  the  Secretary  of  the 

9  Interior  an  application  setting  forth  the  description  of  the 

10  lands  sought  to  be  acquired,  accompanied  by  a  map  or  plat 

11  thereof,   together   with  proof  that   the   lands  described   are 

12  chiefly  valuable  for  the  development  of  water  power,  that 

13  the  entire  area  of  the  land  described  is  necessary  to  accom- 

14  plish  development  of  the  largest  available    power    at    the 

15  place  designated,  and  that  said  application  is  made  for  the 

16  development   of   water  power   in   accordance   with   the   pro- 

17  visions  of  this  Act. 

18  Sec.  3.    That  such  State  shall  submit  proof  with  such 

19  application  establishing  that  the  lands  described  are  chiefly 

20  valuable  for  the  development  of  water  power  and  are  neces- 

21  sary  therefor  and  are  being  sought  for  that  purpose,  and  upon 

22  such  matters  and  facts  being  established,  patent  therefor  or 

23  for  such  portion  thereof  as  is  necessary  for  the  purpose  afore- 

24  said  shall  issue  as  hereinbefore  provided  to  such  State.    Such 

25  patent  shall  include  such  lands  or  all  portions  thereof  as  are 


i  chiefly  valuable  for  the  development  of  water  power  and  are 

2  necessary   therefor,   including   all   necessary    or   convenient 

3  dams,  reservoirs,  canals,  conduits,  pipe  lines,  tunnels,  trans- 

4  mission  lines,  roads,  power  houses,  and  all  other  works  or 

5  structures  necessary  or  convenient  for  the  appropriation  and 

6  beneficial  use  of  water  and  the  power  or  other  products  gen- 

7  erated  thereby  and  for  the  utilization  and  beneficial  use  of  the 

8  same. 

9  Sec.   4.   That  the  provisions  of  this  Act,   where  appli- 

10  cation    is   made   by   the   duly    constituted   authority   of   the 

11  State,  as  hereinbefore  set  forth,  shall  apply  to  any  part  of 

12  the   public   lands   of   the   United   States,   reserved   or   unre- 

13  served,  including  national  forests,  national  monuments,  and 
11  Indian  reservations:  Provided,  That  where  such  lands  are 
15  located  within  any  national  monuments  or  Indian  reserva- 
1G  tions,  the  same  shall  be  located  under  the  direction  of  the 

17  Secretary  of  the  Interior  and  in  such  a  way  as  not  to  inter- 

18  fere  with  such  national  monuments  or  Indian  reservations 
1  !>  or  the  uses  or  purposes  for  which  the  same  are  created. 

20  Sec.  5.  That  such  patent  issued  under  the  provisions  of 

21  this  Act  shall  contain  and  be  subject  to  the  following  con- 

22  dit ions,  limitations,  and  restrictions,  to  wit: 

23  First.    That  said   State  or  Territory  shall   not  alienate 

24  the  fee  simple  title  to  said   lands  and   shall  retain   the  same 

25  for  the  uses  and   purposes   in    this   Act    set    forth,   granting 


1  the  use  thereof  for  such   purposes  and  subject  to  the  laws 

2  of  said  Stale  and  the  United  Slates  applicable  to  and  adopted 

3  for  the  purpose  of  controlling  and  regulating  such  business 
1  and  the  charges  and  services  thereof  so  that  the  State,  or 
.">  those  authorized  under  its  laws  to  appropriate  and  bene- 
(i  ticially   use   such    waters,    will    carry   on    and   continue   the 

7  service  of  generating  and  distributing  such  electric  power. 

8  Second.     That  each  tract  of  land   so  patented  shall  be 

9  held  by  said  State  and  devoted  primarily  to  the  development 

10  of  water  power  either  by  said   State  or  Territory  or  by  a 

11  municipal  corporation  or  corporations   therein    or   by   some 

12  person  or  persons,  association  or  associations,  corporation  or 

13  corporations  thereto  duly  authorized  and  that  said  State  or 
11  Territory  shall  not  devote  or  permit  the  same  to  be  devoted 

15  To  any  other  purpose  or  purposes  in  conflict  therewith. 

16  Third.     That  all  power  generated,  sold,  rented,  or  dis- 

17  tributed  under  authority  of  said  State  by  any  person  or  per- 
IS  sons,  association  or  associations,  corporation  or  corporations, 
l!)  and  the  rates  therefor  and  the  service  therefor  shall  at  all 

20  rimes  be  subject  to  and  shall  be  regulated  and  fixed  by  and 

21  under  the  authority  and  laws  of  said  State,  or  in  cases  in- 

22  volving  interstate  commerce  under  and  pursuant  to  the  laws 
2:5  of  the  United  States,  and  that  such  power  so  generated  shall 
21  never  be  the  subject  of  any  combination  or  consolidation  in 


1  restraint  of  trade  contrary  to  or  in  violation  of  any  law  of 

2  said  State  or  applicable  law  of  the  United  States. 

3  Fourth.     That  none  of  the  properties,  rights,  uses,  or 
1  privileges  patented  under  the  provisions  of  this  Act,  where 

5  the  same  are  assigned  or  transferred  to  or  permitted  to  be 

6  used  or  enjoyed  under  the  provisions  of  this  Act,  shall  ever 

7  be  valued  or  allowed  to  be  charged  for  in  connection  with 

8  any  service  to  the  public  in  excess  of  such  amounts,  if  any, 

9  as  the  person  or  persons,  association  or  associations,  corpora- 

10  tion  or  corporations  shall  have  actually  paid  for  the  same, 

11  and  in  the  event  of  the  acquisition  of  such  property,  rights, 

12  uses,  or  privileges  by  such  State  or  any  municipality  or  sub- 

13  division   thereof,  no  amount  whatever  shall  be  allowed  or 

14  paid  by  said  State,  municipality,  or  subdivision  thereof  for 

15  such  transfer  or  acquisition  in  excess  of  such  amounts,  if 
1C>  any.  as  shall  have  been  paid  therefor  and  which  shall  not 

17  have   been   repaid   or  reimbursed  prior  to  such  acquisition 

18  of  the  same. 

19  Sec.  '">.  That  upon  any  sale  or  disposition  or  attempted 
2(1  sale  or  disposition  of  such  lands  by  any  State  for  any  other 

21  purpose  or  in  any  other  manner  than  as  herein  provided,  or 

22  upon  failure  to  require  said  lands  to  be  devoted  to  the  uses 
2.".  required  by  this  Act,  or  upon  any  violation  of  tin1  provisions 
21  of  this  An,  or  of  the  patent  to  be  issued  hereunder,  the  same 
2.~i  shall    be    forfeited    to    the    United    States,   and    the    Attorney 


1  General,  upon  the  direction  of  the  President  of  the  United 

2  States,  is  authorized  to  institute  such  judicial  proceedings  as 

3  may  l>c  necessary  for  the  purpose  of  ascertaining,  declaring, 

4  and  enforcing  such  forfeiture. 

5  Sec.  7.    That  the  Secretary  of  the  Interior  shall  make 

6  such  rules  and  regulations  as  may  be  necessary  and  appro- 

7  priate  for  the  purpose  of  and  having  the  effect  of  carrying 

8  out  the  provisions  of  this  act. 

9  Sec.  8.    That  nothing  in  this  act  contained  shall  be  con- 

10  strued  as  affecting  or  intended  to  affect  or  to  in  any  way 

11  interfere  with  the  laws  of  said  State  relating  to  the  control, 

12  appropriation,  use,  or  disposition  of  water  or  the  right  or 

13  priority  of  right  to  the  use  of  the  same  now  or  hereafter 
11  vested  under  and  in  accordance  with  the  laws  of  said  State. 


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